Honda Seeks Sedan Slump Refuge With Bigger, Sportier New Accord

(Bloomberg) -- As most automakers struggle to sell sedans to increasingly SUV-enamored Americans, Honda Motor Co. has managed to keep car buyers more interested than most. A fresh redesign now could even give its Accord a boost.

The new Accord debuting Friday takes one of the top-selling family cars in a sportier direction, with a lower and wider stance and more interior room. It's a repeat of the playbook Honda followed with the Civic compact redesign for the 2016 model year, which has helped the Japanese company withstand that segment's slump better than the likes of the Toyota Corolla or Nissan Sentra.

Much as Honda has emphasized plans to shift production to the sport utility vehicles U.S. consumers want, Accord and Civic remain crucial to the franchise. The company is going to build the Accord using shared underpinnings with both the Civic and the CR-V crossover, allowing for greater flexibility to shift production to meet demand. These three vehicles alone exceed 1 million deliveries a year in the U.S. alone, about two thirds of Honda's volume in the market.

“Everything on the Accord is borrowed from somewhere else in Honda,” said Dave Sullivan, an analyst with market researcher AutoPacific Inc. “It's the only way to survive and make sedans profitable these days. You've got to share parts with a crossover and use the crossover volume to make it successful.”

To fend off competition from the redesigned Toyota Camry and Hyundai Sonata now in the market, plus a new Ford Fusion expected next year, Jeff Conrad, Honda's vice president for U.S. sales, said the new Accord going on sale this fall will offer better ride and handling and more room in the interior.

‘Same Ideas'

“The sporty driving performance of the Civic, plus styling to match, have led to some fantastic sales, and now we're applying these same ideas to Accord,” Conrad said in a phone interview.

The Accord will no longer come with a six-cylinder engine, with Honda instead offering a choice between two turbocharged four-cylinder powerplants and a gas-electric hybrid. The Honda Sensing safety system, which include automatic braking and lane-departure warnings, will be standard equipment.

The Accord's reputation for top-notch quality helped steal away the hearts and minds of U.S. baby boomers from Detroit during the 1980s. Even in the last year of its life cycle, the outgoing version of Honda's sedan is still a solid performer.

The company is on track to sell about 320,000 Accords this year, with deliveries slipping 5.5 percent in the first half. The broader mid-size car market has fared much worse -- sales plunged 18 percent this year through June, according to Kelley Blue Book.

Better Residuals

With Accord, Honda keeps a lid on incentives and delivers only a handful to rental companies and other fleet operators who generally pay half as much as individual buyers. As a result, Accords retain about 63.5 percent of their value after three years, more than seven percentage points better than the average mid-size sedan, according to car-shopping researcher Edmunds.

Sedan sales are plunging so fast that Honda can't count on success for its new Accord, said Eric Noble, president of The CarLab, a consulting firm in Orange, California. Several automakers are wondering whether they should abandon the segment entirely, he said. To stay ahead and keep bucking the trend, the Accord will need a level of refinement and attention to detail that's unprecedented even for Honda.

“The Civic cemented its position as the giant in the segment and made itself mostly immune to the downward pressure of declining car sales,” Noble said. “Anything less will be seen as stagnation for the Accord, either in price or volume.”

To contact the reporter on this story: John Lippert in Chicago at jlippert@bloomberg.net.

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, David Welch