Fuel efficiency pays off for Honda

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In recent years, while many automakers were building bigger and brawnier trucks and SUVs, Honda Motor Co. stuck to its core business of making fuel-efficient vehicles.

Unlike its leading Japanese rivals, Honda passed on developing a full-size pickup. It didn’t offer a powerful V-8 engine for its premium cars and SUVs either, focusing its resources instead on designing better versions of its stalwart Civic compact and tiny Fit.

That strategy is now paying off. This year Honda has clocked the best performance of any major player in the U.S. market.

Its sales are up 4.8 percent in a market that contracted 8.4 percent in the first five months of 2008.

In May, the Civic became the top-selling vehicle in the United States, displacing the longtime champion, Ford Motor Co.’s F-Series trucks, as consumers traded in gas guzzlers for more frugal models.

“They have an array of products that is in tune with today’s economic climate,” said Jim Hossack, a consultant at AutoPacific Inc. in Tustin, Calif. “They don’t have a Suburban, they don’t have a Super Duty, but they have small, fuel-efficient vehicles. They’re in good shape.”

Honda could sell even more vehicles in the U.S. if the Japanese automaker shipped more small cars to its American Honda Motor subsidiary.

Fit subcompacts are sold within five days of reaching showrooms, said John Mendel, executive vice president at American Honda.

But Honda is also scrambling to meet demand in Japan, where the Fit is the best-selling vehicle. “Sixty percent of the world market is small cars. We compete with the rest of the world for the Fit,” Mendel said. It gets 27-28 miles per gallon in the city and 33-34 mpg on the highway.

This past weekend, Jim Kurtz, a software specialist living near Baltimore, struggled to track down a Fit for his daughter.

“I called five dealers, and only one of them had the car,” Kurtz said. “The demand is unbelievably high.”

This year, Fit sales are up 64 percent, Civic sales are up 20.5 percent, and sales of the Civic hybrid are up 17.5 percent, according to Autodata Corp.

Honda’s trucks, however, are not performing as well.

The CR-V crossover is popular, but Honda has a tough time moving its boxy Element vehicles. They spend nearly three months on dealer lots, compared with a 56-day average for compact crossovers as a whole, according to J.D. Power and Associates. Honda’s midsize Ridgeline pickup is also a slow seller, and now carries $3,500 in incentives, according to online auto research firm Edmun ds.com.

Sales of Honda’s premium Acura vehicles have been weak, too, in the last months before the rollout of redesigned models.

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