Honda juggles production to meet changing auto buyers’ demand – Columbus Dispatch

Posted: Wednesday, December 30, 2015

Car buyers are embracing crossover vehicles at the expense of sedans, a shift that has led to
breakneck production at Honda’s plant in East Liberty, which makes the CR-V, while output is down
at the company’s nearby plant in Marysville, which produces the Accord.

Managers at the East Liberty plant, whose main product is the CR-V crossover, have needed to
schedule overtime shifts to meet record demand for the model.

Down Rt. 33 at the Marysville plant, the company has canceled five production days in the past
two months to help match demand for Accords with supply, officials said.

“We are really in the middle of a very robust light-truck market,” said Chris Abbruzzese, a
Honda spokesman. “But the Accord is still the retail sales leader in its segment.”

Through November, Honda truck sales — which include crossovers and SUVs — are up 10 percent and
car sales are down 4 percent. Figures include both the Honda and Acura brands.

Overall sales, including cars and trucks, are up 2 percent, with 1.44 million units sold for
that 11-month period. That means Honda is poised to set a record for annual sales when December
results are released next week, surpassing the previous high from 2007.

The Accord remains Honda’s volume leader, with 320,501 units sold through November, but that’s
down 10 percent from the prior year. Right behind, and quickly gaining, is the CR-V, with 314,462
units sold, up 4 percent.

Other automakers are seeing a similar shift in consumer preferences. The Toyota Camry, the
country’s top-selling sedan, has sold 392,056 units this year, down 1 percent.

“There is a shift going on,” said Matt DeLorenzo, managing editor for news at Kelley Blue Book. “
I don’t think it’s a temporary blip. It’s a longer-term trend, especially with people with young
families. The traditional sedan just isn’t doing it for them anymore.”

Crossovers have gained market share because many consumers like the higher ride and additional
storage space compared to a sedan, DeLorenzo said. At the same time, a crossover has better fuel
economy than a full-size SUV, although that has been less of a concern this year because of low
fuel prices.

The CR-V’s rise has put it ahead of Honda’s other high-volume vehicle, the Indiana-produced
Civic, which has sold 302,588 units, up 1 percent.

Another key measure of demand is how many days of inventory are available to be sold. Automakers
often aim to have no more than 60 days of supply of any model.

As of Dec. 1, there were 69 days of supply of the Accord, compared with 49 days of supply of the
CR-V, according to Kelley Blue Book.

The size of the Accord inventory could explain Honda’s decision to cancel production days. The
company can cancel days, or alternately add overtime shifts, when its output is out of sync with
dealer sales. When a production day is canceled, employees can take vacation or report to work for
non-production tasks.

Honda has more than 14,000 employees in Ohio. The largest single site is the Marysville plant,
which has about 4,250 employees and two production lines. It makes the Accord along with several
Acura models. The East Liberty plant has about 2,350 employees on one line and makes the CR-V and
Acura RDX.

If the sales trends continue in 2016, with further erosion in car sales and growth in
light-truck sales, Honda might need to consider additional steps to manage the output of the two
plants.

But the company can take comfort that the Accord remains among the leaders in its segment.

“Even though the traditional (sedan) is a declining vehicle, it’s still not extinct,” DeLorenzo
said.

dgearino@dispatch.com

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