US exec says Honda should keep gains, grow in 2013

Last Updated: Wed, Jan 16, 2013 18:00 hrs

Last year was Honda's comeback year.

After an earthquake and flooding slowed its Asian factories and caused car shortages in 2011, the maker of the Honda and Acura brands resupplied its dealers and posted a 24 percent U.S. sales gain.

Honda also updated its two top-selling vehicles, rolling out an all-new midsize Accord and a rushed revamp of the compact Civic.

John Mendel, the company's executive vice president in the U.S., is confident that Honda will protect its sales gains and even grow some as U.S. auto sales rise and dealers have a full year selling new Civics and Accords. Yet Mendel is wary of other automakers clawing to take away Honda's sales.

In an interview Tuesday at the Detroit auto show, Mendel discussed the U.S. auto market, sales forecasts, and the prospects of adding jobs in North America. His comments are edited for length and clarity:

— In 2011, you lost sales because of natural disasters, largely to the Detroit automakers. Last year you got the sales back. What happens this year?

"We've kind of hit the reset button on the video game. Everybody's got a full complement of weapons. Everybody's back on a level playing field. It will come down to strategy. We have a very strong hand. I think we will certainly hold the share and we'll be able to maybe grow it some. We have a strategy and the product to back that up. "

— Many analysts say this year, total U.S. sales could hit 15.5 million, a million more than in 2012. How has the year started and what do you see for 2013?

"Anecdotal feedback from the dealers is very strong. We're tracking up from certainly last January and last year. The month seems to be going pretty well. The momentum that we built last year seems to have carried over."

For the full year, Mendel is a little more conservative, predicting U.S. sales in a range of 14.8 million to 15.3 million "in spite of kind of continuous volatility with consumer confidence." He's optimistic the U.S. government won't shut down or default on its debt because of a congressional showdown over the raising the debt ceiling. "I have difficulty imagining that we would do that," he said, although he added, "I didn't say it wouldn't happen." If it does, car sales could suffer.

— If U.S. sales hit 15.5 million or more, can your factories handle that, or will you have to expand and hire more people? And are you continuing to produce more vehicles in the U.S. and North America?

"We produced almost 1.7 million vehicles in North America last year" to replenish inventory depleted by the 2011 earthquake in Japan and flooding in Thailand. "You probably won't see us making proclamations about hiring 2,000 or 3,000 more people. We do it relatively quiet and we do it as we need it."

Honda has an unwritten policy of producing as many vehicles as possible in the region where they are sold. Typically the company's North American factories make 75 percent to 80 percent of the models sold in the region. "This last year we topped 90 percent built here," Mendel said. Once a new factory for subcompacts opens in Mexico next year, that figure will be close to 95 percent, he said.

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