Why Cars Still Matter to Honda

DETROIT – In today’s CUV-crazy U.S. automotive market, you might think an auto executive in charge of car sales would be as optimistic as a fisherman casting a line in a swimming pool.

But Henio Arcangeli Jr., American Honda’s senior vice president-automobile sales, seems upbeat about the future of cars.

It helps that the No.2 and No.3 top-selling cars in the U.S. last year were, respectively, the compact Honda Civic (325,760 units, according to Wards Intelligence) and midsize Honda Accord (291,071). The midsize Toyota Camry claimed first with 343,439 deliveries.

Still, unlike their dominant days, car segments account for only 30% of market share in the U.S. CUVs, SUVs and pickups gobble up the rest.

It’s reached a point where domestic automakers General Motors, Ford and Fiat Chrysler are all but abandoning the car market.

Yet despite their minority share, cars still represent about 5 million annual vehicle sales in the U.S. “That’s huge,” Arcangeli tells the Automotive Press Assn. here during a presentation largely focused on “why passenger cars matter, especially for Honda.”

The thinning out of the competition represents an opportunity for Honda, he says. “Domestics pulling out of the car segment allow us to gain market share.”

Another reason the future of cars is bright for automakers that stick with them is the high percentage of young consumers buying sedans, Arcangeli says. “Fifty-five percent of first-time vehicle buyers are buying passenger cars. That number jumps to 70 percent with Generation Z.”

Henio Arcangeli

Young automotive consumers are drawn to cars because they typically cost less than utility vehicles, says Arcangeli, while quickly noting utilities enjoy popularity among the younger set too. (Henio Arcangeli Jr., left)

“We have a balanced approach to trucks and cars,” he says. Led by the segment-leading CR-V small CUV, Honda’s utility/truck sales share is 55% and has grown continuously for the past nine years.

Honda car sales dropped 9% last year compared with 2017. But the segment decline was more dramatic for GM (21.1%), Ford (17.7%) and Fiat Chrysler (17%), according to Wards Intelligence.

As vehicle prices rise, “obviously a challenge going forward is affordability,” he says. That’s why many consumers on a budget – including multicultural segments – buy more-affordable cars. “They are a good option.”

During a Q&A, Arcangeli is asked if today’s young people might buy cars because they want to drive something different than the utility vehicles their parents own.

He says he’s not so sure that’s the case. “I’d have to check with our research department.”