Honda revs incentives, ad spending; aging Civic targeted


By KATHY JACKSON | Automotive News

DETROIT -- Stung by two straight years of lower sales of cars in general and for the bread-and-butter Civic specifically, Honda Division is boosting spending on incentives and advertising.

Civic sales were down 4.3 percent last year, while Honda Division's overall car sales slipped 2.7 percent.

In a bid to turn the tide, Honda will boost its first-quarter ad budget by 50 percent over a year earlier to an estimated $156 million. That would be one of the highest quarterly figures in Honda Division's history.

Honda also will pay dealers $400 for each Civic they sell through March. If dealers meet certain company sales goals, Honda will boost payments to $800 per Civic, retroactive to Dec. 20, when the program started.

"We're not panicked," said American Honda Executive Vice President Dick Colliver in an interview last week at the Detroit auto show. "We see an opportunity in the first quarter when most (of the industry) is sleeping."

Honda is not accustomed to incentive-driven marketing campaigns because its vehicles typically are in high demand. The division spent no money on consumer spiffs last year, and it spends far less on overall incentives than General Motors, Ford Motor Chrysler group or Toyota Division.

Colliver said he has no plans to offer consumer incentives, but he agrees that dealer incentives were needed.

"We've seen a decline in the small passenger car segment over the last three years so we need incentives," Colliver said. "We must continue to hold our guns."

Colliver projects sales of 1.4 million for American Honda this year, up about 3.7 percent.

He says about 184,000 of those sales will be Acuras.

The new marketing campaign comes at a time when Honda dealers were getting edgy.

In 2002, Civic sales had slumped 5.6 percent, while Honda Division's car sales fell 5.8 percent.

Honda Division's car sales remained weak in 2003, and dealers complained that the Civic is getting old.

"Civic is our weak link," says Honda dealer council chair Michael Zimbrick, co-CEO of Zimbrick Inc., in Madison, Wis.

"We told the company that we needed more marketing dollars and innovative ways to move the Civic."

According to the Automotive News Data Center, Honda had a 76-day supply of Civics on Jan. 1. Last year, the company typically had a 62-day supply.

Despite the rising inventories and declining sales, Honda is hardly a basket case.

Overall sales of Honda and Acura cars and trucks surged 8.2 percent last year.

But the gain was fueled by truck sales, which soared 32.6 percent for Honda Division and 8.2 percent at Acura.

Although Honda was the No. 4 best selling car brand in the United States last year, the same position it held in 2002, it fell further behind the No. 3 seller.

In 2002, Honda trailed No. 3 Chevy by 20,589 units. But last year it trailed No. 3 Ford Division by 85,821 sales. Meanwhile, sales of Toyota Division, the No. 1 car seller in the United States last year, rose 2.7 percent, and No. 2 Chevy's sales soared 7.1 percent.

Art Spinella, president of CNW Marketing/Research Inc., in Bandon, Ore., says he is not surprised by Honda's action.

"We're looking at a very strong General Motors this year; Nissan is pushing cars; and Toyota is gonna push back," Spinella says.

"Honda will have to step up. But the good part is that Honda has a lot of room because they have been at such low incentive levels."

According to CNW, Honda spent $1,096 per vehicle on incentives last year, compared with $4,106 for GM and $2,393 for Toyota.

The upcoming ad campaign will cover the entire Honda line.

Colliver said most of the increased spending will go into TV, magazines and newspapers.

According to Competitive Media Reporting in New York, Honda Division spent an estimated $104.2 million on measured media in the first quarter of 2003, up from $91.6 million a year earlier and $93.8 million in the 2001 quarter.