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Quote:

Honda to Build SUT; Acura Gets Small SUV

By Katherine Zachary

WardsAuto.com, Sep 25 2003

KIRKLAND, WA – It’s not a pickup truck, but the closest American Honda Motor Co. Inc. has come to one will debut at the 2004 North American International Auto Show in Detroit.

KIRKLAND, WA – It’s not a pickup truck, but the closest American Honda Motor Co. Inc. has come to one will debut at the 2004 North American International Auto Show in Detroit.

Honda in January will show a Pilot-based sport/utility truck concept that gives clear indication of the brand’s next light-truck direction, Tom Elliott, executive vice president-auto operations, tells Ward's.

Elliott won’t say when the new SUT will hit the streets, but an ’05 model-year debut is likely.

Also green-lighted: an entry-level Acura SUV smaller than the popular MDX. Still a couple years off, it would take advantage of an existing Honda platform.

Light trucks are top priority for Honda and Acura right now, Elliott says – even more so than aggressive development of gas-electric hybrid powertrains, a technology Honda has championed.

“Even in luxury, the SUV light-truck side is growing dramatically, and we’re obviously missing some opportunities,” Elliott says.

This year, some 40% of Hondas and Acuras sold will be light trucks – up from 33% last year and zero nine years ago. Elliott says he’d like to see the company’s car-truck ratio eventually mirror the market, which he thinks will shift to 52% truck.

Elliott adds, however, that Honda continues to look for opportunities for its third hybrid, while Acura is eying ways to integrate advanced-powertrain technology for the first time. Another Honda hybrid likely would emphasize fuel economy, while Acura would use the technology for added power or the incorporation of 4-wheel drive.

The auto maker also is going forward with a new entry-level subcompact to slot in below the Civic. The Fit, popular in Japan, still is a contender but Honda is taking other global vehicles into consideration and exploring others that have yet to reach production.

While Elliott won’t give a time line, he does confirm plans for one small car have been approved.

Honda won’t, he says, follow Toyota’s path and create a third sales channel for its small car, as its rival did with the Scion brand.

“We have younger buyers than they do,” he says. “As long as we can appeal to them, we don’t need another channel right now.”

Elliott says the auto maker can be profitable at a price-point below the Civic and is not scared off by base prices in the $12,000 range for Scion products. Realistically, he says, Scions are selling in the $14,000 range – where Honda could operate comfortably.

“Our interest is not competing directly with the Koreans,” he says. “We can be a little higher in the low end.”

Other future product plans include the next-generation Odyssey minivan for ’05 – a vehicle that set the minivan benchmark with the introduction of the last generation.

“I don’t know if (the next generation) will be revolutionary, but there will not be anything missing from it,” Elliott says. It will include features other auto makers adopted first, such as the split rear fold-down seat, and add something nobody has, he says.

There’s room to squeeze more sales out of the next generation, and there also is room to bump Pilot sales.

This all will be made easier when phase two of the Lincoln, AL, plant is completed in March – adding 150,000 units of annual, straight-time capacity to Honda’s North American production.

The Lincoln plant will take on all Odyssey production. Currently, the Odyssey is built at both Lincoln and Honda’s Alliston, Ont., Canada, facility. The move frees capacity for more Pilot and MDX production in Alliston, while the remainder of open space in Alabama will be occupied by “anything new,” Elliott says – most likely the SUT.

Elliott says it’s difficult to tell if Honda will need capacity beyond the Alabama expansion. If sales keep going at 2003’s torrid pace, the need for capacity would be a certainty. Sales so far this year are up 11.9% over the first eight months of 2002, according to Ward's data – a record stride despite incentive levels lower than year-ago when they helped clear out the last-generation Accord.

Incentives, Elliott says, are half those of competitor Toyota Motor Sales U.S.A. Inc. “And Toyota is spending about a third of the Big Three’s outlay.

“We’ve got product that people want to buy, not that you have to give them money to take,” he says.