Honda Motor Co.’s Insight hybrid may fall 33 percent short of its U.S. sales goal as cheap fuel, the economic slump and competition from Toyota Motor Corp.’s Prius undermine demand for the model.
First-year Sales of Honda’s gasoline-electric Insight, which debuted at U.S. dealerships in late March, may be between 50,000 and 60,000 units, John Mendel, the company’s U.S. executive vice president, said in a June 11 interview at Honda’s U.S. headquarters in Torrance. “I don’t think we’ll get to 90,000,” he said.
Gasoline prices in the U.S. have fallen 35 percent over the past year, eroding demand for fuel-efficient cars, even as the overall market has plunged 37 percent due to the recession. Toyota has cut the base price of the Prius by $1,000 to compete with the Insight
“Sales of hybrids have a strong correlation to gasoline prices, especially in the U.S. and Toyota’s Prius has had more customers in the past, so it’s a tough competition for Honda,” said Koji Endo, an analyst at Credit Suisse Securities (Japan） Ltd.
The lower-than-expected demand in the U.S. contrasts with sales of the car in Japan where fuel prices are 78 percent higher than in the U.S. The Insight was the top-selling car in Japan in April and was overtaken by the Prius last month.
Honda fell 2 percent to 2,780 yen as of 1:44 p.m. in Tokyo. The shares have gained 46 percent so far this year.
Gas Prices
Retail prices for gasoline in Japan are $4.69 a gallon, the Tokyo-based Oil Information Center said on its Web site on June 10. By comparison, U.S. consumers paid an average of $2.64 for a gallon of gasoline on June 12, 35 percent less than a year ago, according to AAA’s Daily Fuel Gauge Report.
The Insight, rated by the U.S. as getting 41 miles per gallon in city and highway driving, is priced from $19,800 to $23,100. By comparison, Toyota’s 2010 Prius, which averages 50 mpg, sells for between $22,000 and $31,770.
Hybrid sales in the U.S. fell 38 percent through May to 100,337 units, just ahead of the market’s overall 37 percent drop, based on data compiled by Bloomberg News. Slack demand for fuel-saving models led General Motors Corp. to announce June 11 that it’s discontinuing the hybrid version of its Malibu sedan.
Toyota aims to sell 180,000 units of its new Prius in the car’s first 12 months, matching the model’s U.S. volume record reached in 2007. Prius sales this year through May fell 46 percent.
Demand for Insight should pick up later in the year as the recession eases and fuel prices increase, Mendel said.
U.S. dealer inventory of Japan-built Insights is “good” given current market conditions and sales could be as high as 4,000 units this month, up from 2,098 in May, he said.
Source: Bloomberg
First-year Sales of Honda’s gasoline-electric Insight, which debuted at U.S. dealerships in late March, may be between 50,000 and 60,000 units, John Mendel, the company’s U.S. executive vice president, said in a June 11 interview at Honda’s U.S. headquarters in Torrance. “I don’t think we’ll get to 90,000,” he said.
Gasoline prices in the U.S. have fallen 35 percent over the past year, eroding demand for fuel-efficient cars, even as the overall market has plunged 37 percent due to the recession. Toyota has cut the base price of the Prius by $1,000 to compete with the Insight
“Sales of hybrids have a strong correlation to gasoline prices, especially in the U.S. and Toyota’s Prius has had more customers in the past, so it’s a tough competition for Honda,” said Koji Endo, an analyst at Credit Suisse Securities (Japan） Ltd.
The lower-than-expected demand in the U.S. contrasts with sales of the car in Japan where fuel prices are 78 percent higher than in the U.S. The Insight was the top-selling car in Japan in April and was overtaken by the Prius last month.
Honda fell 2 percent to 2,780 yen as of 1:44 p.m. in Tokyo. The shares have gained 46 percent so far this year.
Gas Prices
Retail prices for gasoline in Japan are $4.69 a gallon, the Tokyo-based Oil Information Center said on its Web site on June 10. By comparison, U.S. consumers paid an average of $2.64 for a gallon of gasoline on June 12, 35 percent less than a year ago, according to AAA’s Daily Fuel Gauge Report.
The Insight, rated by the U.S. as getting 41 miles per gallon in city and highway driving, is priced from $19,800 to $23,100. By comparison, Toyota’s 2010 Prius, which averages 50 mpg, sells for between $22,000 and $31,770.
Hybrid sales in the U.S. fell 38 percent through May to 100,337 units, just ahead of the market’s overall 37 percent drop, based on data compiled by Bloomberg News. Slack demand for fuel-saving models led General Motors Corp. to announce June 11 that it’s discontinuing the hybrid version of its Malibu sedan.
Toyota aims to sell 180,000 units of its new Prius in the car’s first 12 months, matching the model’s U.S. volume record reached in 2007. Prius sales this year through May fell 46 percent.
Demand for Insight should pick up later in the year as the recession eases and fuel prices increase, Mendel said.
U.S. dealer inventory of Japan-built Insights is “good” given current market conditions and sales could be as high as 4,000 units this month, up from 2,098 in May, he said.
Source: Bloomberg
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