Honda Cars : Civic-Passat-Caravan Buyers Shake Off Consumer Reports | 2013 New Honda Car Reviews 0

By Craig Trudell 

Liz Doll, a real estate agent in Connecticut, had little interest in the highly rated Hyundai Elantra when shopping for a new car this year. She instead went with a Volkswagen Passat (PSAT) that has drawn mixed reviews.

“The handles on the Hyundai felt cheesy and cheap,” said Doll, a 37-year-old mother of three. “Everything you touched felt like it was going to fall off. I didn’t have that experience with the Passat.”
Models such as Volkswagen AG (VOW)’s Passat and Honda Motor Co.’s Civic, which lost Consumer Reports’ coveted recommended status in August 2011, are among some of the biggest gainers in the U.S. auto market this year. The disconnect shows that buyers can be more forgiving in showrooms than testers are in labs as industrywide quality gains bring automakers closer to parity.
“The overall competitive set from all manufacturers has become so good that, for some of us so-called experts in the industry, perhaps our expectations have gotten almost impossible to reach,” Alec Gutierrez, an analyst for researcher Kelley Blue Book in Irvine, California, said in a telephone interview.
Increased demand for models such as Passat and Civic probably helped spur a 12 percent increase in U.S. deliveries of cars and light trucks last month, the average estimate of nine analysts surveyed by Bloomberg. That gain would keep the industry near September’s rate, the fastest U.S. sales pace in 4 1/2 years.

Preceding Sandy

Most analysts issued their sales estimates before Hurricane Sandy slammed major auto markets including New York, Washington and Philadelphia. The storm, which churned through an area that generates about 25 percent of U.S. auto sales, disrupted dealers at the month’s end, when car buying tends to accelerate.
Deliveries of Volkswagen’s Passat have soared to 83,662 this year through September, from just 4,893 a year earlier, according to Autodata Corp. The Wolfsburg, Germany-based automaker surpassed its previous annual sales record for Passat in less than nine months, according to a Sept. 18 statement.
Volkswagen, which is targeting more than 500,000 vehicle sales in the U.S. this year, may have joined Toyota Motor Corp. (7203) in posting the biggest sales increase in October from a year earlier. Combined Volkswagen and Audi brand deliveries probably climbed 26 percent, the average of four analysts’ estimates. Toyota may match that gain, according to the average of eight estimates.

Industry Pace

U.S. light-vehicle deliveries probably rose 12 percent in October to 1.15 million, according to the nine analysts surveyed by Bloomberg. The annualized industry sales rate, which is adjusted for seasonality, may accelerate to 14.8 million, the average estimate of 16 analysts.
The industry sales pace was 13.3 million in October 2011 and 14.9 million in September, the best since March 2008, according to researcher Autodata in Woodcliff Lake, New Jersey.
Consumer Reports said the Passat “lost some of the sharpness of its predecessors” in its initial review of the model for the Yonkers, New York-based magazine’s October 2011 issue.
“The last-generation Passat was a better car overall, with agile handling” and a “well-finished interior,” Consumer Reports said after complete testing in a Dec. 28 post on its website. “But a high price and so-so reliability, plus a lack of marketing, kept it off the radar for many buyers.”
In addition to pricing and marketing, consumers also will snap up models with average or below-average reviews because of loyalty and perceptions of quality that are slow to budge, Kelley Blue Book’s Gutierrez said.

Civic Criticism

The Civic, which Consumer Reports said in August 2011 felt like an “insubstantial” ride, with long stopping distances and loud road noise, has been the sixth best-selling vehicle in the U.S. this year.
“Civic got hammered last year when that 2012 redesign was first unveiled: cheaper interior, less-quality materials, de- contented on the entry-level trims, not enough of a step forward to compete,” Gutierrez said.
Despite the criticisms, Civic deliveries surged 40 percent through September to 234,029. The model is on pace to retake the compact car segment lead this year after dropping to No. 3 behind Toyota’s Corolla and General Motors Co. (GM)’s Cruze in 2011.
The sales gain for Tokyo-based Honda in October may trail only Volkswagen’s and Toyota’s. The average estimate of eight analysts is for a 16 percent increase. Honda and Toyota City, Japan-based Toyota both are rebounding from last year’s supply shortages caused by a tsunami in their home country.

‘No Headaches’

“Honda still delivered a sedan that’s going to leave consumers with little to no headaches whatsoever,” Gutierrez said. “It just gets the job done. Honda and Toyota buyers especially are fierce brand loyalists and that’s just what they stick with.”

Chrysler Group LLC, which has steadily gained U.S. market share since 2010, has made quality gains and yet many of its brands and models remain below average in tests and surveys by the likes of Consumer Reports and J.D. Power & Associates.

The automaker majority-owned by Fiat SpA (F) may have boosted sales in October by 15 percent, the average estimate of 11 analysts, to extend its streak of monthly increases from a year earlier to 31 consecutive months.
Chrysler claimed four of the 10 worst-performing brands in Consumer Reports’ annual reliability survey, which was released this week. The magazine, which boosts its own objectivity by buying every vehicle it tests and forgoing advertising, has praised redesigned models such as the Chrysler 300 sedan and Jeep Grand Cherokee sport-utility vehicle.

Minivan Split

Chrysler’s Dodge Grand Caravan and Chrysler Town & Country minivans illustrate some of the ways the automaker has managed to outpace other automakers’ sales gains as it continues to overhaul its lineup.
The two vans, which rank No. 1 and No. 3 in the U.S. minivan segment, respectively, are cheaper than the second- ranked Toyota Sienna and Honda’s Odyssey, and the U.S. models are offered with warranties of as much as five years and 100,000 miles (161,000 kilometers).
Minivans are subject to “one-size-fits all” evaluations by testers such as Consumer Reports that can hurt their scores, Doug Betts, the global quality chief for Chrysler and Turin, Italy-based Fiat, said in an interview.
“The No. 1 reason people buy our minivans is because of those stow-and-go seats, for their flexibility and the utility,” said Betts, who pointed to the feature as a reason the models get dinged for poor seat comfort. The minivans also perform poorly on a slalom track, which is unlikely to matter to buyers in the segment, he said.

New Reality

In criticizing Honda for its disappointing Civic redesign, Consumer Reports said in an August 2011 post on its website that the automaker is under pressure because “old assumptions are becoming blurred.” Automakers such as Ford Motor Co. (F), Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) are now making better cars.
“A Ford Fusion is more reliable than the Accord, not to mention quieter and nicer to drive,” a tester for the magazine wrote in the post titled, “Honda redesigns: Is the automaker resting on its laurels?” “Hyundai and Kia are building fuel- efficient and well-equipped cars at aggressive prices, and they often drive like Hondas used to.”
Ford, which has struggled with nagging problems plaguing its electronics systems, may report a 3.2 percent increase in October U.S. sales, the average of 11 estimates. The Dearborn, Michigan-based automaker’s brands dropped in Consumer Reports’ reliability and J.D. Power’s Initial Quality Study surveys this year in part because of its MyFord Touch and MyLincoln Touch control systems.

Buyer’s Regret

Doll, the Connecticut real estate agent who bought the Volkswagen Passat, said she was motivated to buy a new car because of poor fuel economy with her 2007 Honda Pilot. While she is happy with features she didn’t have previously such as a Bluetooth wireless technology and navigation, she regrets not waiting for Ford to begin selling its C-Max hybrid that gets 47 mpg.
“Buyer’s remorse has really kicked in,” she said. “If I had just waited a month, I probably would have bought the C-Max. Now I’m like, maybe I’ll trade in the Passat next year. Maybe I’ll be one of those new-car people.”
GM, whose Cadillac line led gains by all four of the Detroit-based automaker’s brands in Consumer Reports’ reliability survey, probably boosted sales by 7.8 percent in October, the average of 11 estimates.
Sales for Nissan Motor Co., the only Japanese automaker to have below-average reliability in the Consumer Reports survey, may have risen 4.6 percent in October, the average of eight estimates. Models such as the Versa small car and Armada were drags on Yokohama, Japan-based Nissan.
South Korea’s Hyundai and Kia, which are both based in Seoul, may combine to sell 13 percent more vehicles in October than a year earlier, the average of six analysts’ estimates.
The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from October 2011. Forecasts for the seasonally adjusted annualized rate, or SAAR, are in millions of light vehicles.
October had 26 selling days, the same as the year-earlier period.

                              GM     Ford   Chrysler   SAAR

Rod Lache                     6%      1%      10%      14.6
(Deutsche Bank)
Peter Nesvold                8.8%    3.0%     15%      14.8
(Jefferies)
Patrick Archambault           7%      2%      19%      14.8
(Goldman Sachs)
Joseph Spak                  8.1%    2.4%     9.3%     15.0
(RBC)
Chris Ceraso                  6%      5%      15%      14.9
(Credit Suisse)
Emmanuel Rosner              11%     2.7%     18%      15.0
(CLSA)
Brian Johnson                8.2%    1.6%     15%      14.9
(Barclays)
Ryan Brinkman                 NA      NA       NA      14.7
(JPMorgan)
Itay Michaeli                 NA      NA       NA      14.7
(Citigroup)
John Sousanis                9.7%    5.4%     19%      15.0
(Ward’s)
George Magliano               NA      NA       NA      14.6
(IHS Automotive)
Jeff Schuster                 NA      NA       NA      14.8
(LMC Automotive)
Alan Baum                     NA      NA       NA      14.8
(Baum & Associates)
Jessica Caldwell             4.7%    3.5%      13%     14.8
(Edmunds.com)
Jesse Toprak                 7.3%    5.3%      15%     14.9
(TrueCar.com)
Alec Gutierrez               8.8%    3.2%      16%     14.7
(Kelley Blue Book)

Average                      7.8%    3.2%      15%     14.8

Source;

http://www.businessweek.com/