Honda Plots Sales Gain With More Powerful US Accord

Honda Unveils The New 2008 Accord

Honda Motor Co. has given the Accord a new look, more power and a larger interior in a bid to lift U.S. sales about 10 percent over the current model - just as the auto market is shrinking.

The 2008 Accord, the eighth edition since the car's 1976 introduction, arrives Sept. 12 at U.S. dealerships. Accord sedan and coupe sales should top 400,000 in the first 12 months, said Sage Marie, a spokesman for Tokyo-based Honda.

That would be the highest volume since 2001, and a 50,000- unit increase from 2006. U.S. consumers still buy more than 200,000 family sedans a month, including the Accord and Toyota Motor Corp.'s Camry. Competition from so-called crossovers, such as Honda's own CR-V and Toyota's RAV4, has made Honda's goal for the Accord more difficult.

"It's gotten very hard to reach high-volume targets like that, given the fragmentation of the market," said Standard and Poor's analyst Efraim Levy in New York. "Few vehicles now sell at the 400,000-level," said Levy, who rates Honda's shares "hold" and doesn't own them.

Working in Honda's favor are U.S. gasoline prices that reached a record $3.22 a gallon in May. That's raised demand for four-cylinder autos, including the Accord and Honda's Civic, that burn less fuel than V-6 engines.

The Accord will be built in Marysville, Ohio, where the car was unveiled yesterday. The release comes as U.S. sales of new vehicles are falling.

Analysts, including S&P's Levy and Jeff Schuster of J.D. Power and Associates, have cut their forecasts for industrywide sales for the year to between 16.2 million and 16.3 million units, down from about 16.5 million at the start of the year. Sales of new vehicles declined 3.2 percent so far this year, led by July's 12 percent drop, as the U.S. economy has weakened.

Honda's American depositary receipts rose 37 cents to $32.16 in New York Stock Exchange composite trading.

The Camry has outsold the Accord every year since 2002 to remain the top-selling U.S. passenger car, consistently staying above 400,000 units. The current Camry, released in March 2006, reached a record 448,445 in 2006. The Toyota model benefits from a sales source Honda eschews: rental-car fleet sales.

To reach its goal, Honda hopes to win sales from some buyers who've been disappointed by the fuel economy and handling of midsize sport utility vehicles and other types of light trucks, Dan Bonawitz, Honda's U.S. vice president for product planning, said at a technical briefing on the Accord in June.

While the company can count on a large, stable base of repeat Accord buyers, family sedans are likely to remain a stagnant product segment, said Eric Noble, president of Car Lab, an industry researcher in Orange, Calif.

"I'm sure Accord is well executed, but it's hard to anticipate any significant growth in volume," Noble said.

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