(This story has been corrected to note that Honda is trimming production of just two of the four models being built on the Marysville line.)
Honda is slashing production of the Accord and Civic models at its flagship U.S. assembly plant in Marysville, Ohio, a move that reflects the continuing slide in American passenger car sales.
The cutback comes as other manufacturers trim their own passenger car output, General Motors closing three of its North American assembly plants and dropping entirely a half-dozen models.
Honda’s decision to drop one of the two shifts currently producing Accord in Marysville stands in contrast to what rival Toyota has done. That largest of the Japanese automakers has actually scored a 6% increase in sales of its own midsize sedan, the Toyota Camry, so far this year. But to do that, the carmaker has engaged in aggressive discounting.
“Basically, we have been trying not to get caught up in a price-cutting race,” Seiji Kuraishi, Honda’s chief operating officer, told the r Street Journal.
Four other models are produced on the Marysville line, including the Honda Civic and CR-V, and the Acura ILX and TLX. Only Accord and Civic will see production cuts as the line is slowed.
The cuts, nonetheless, reflect the transformation of the U.S. automotive market. Once dominated by sedans, especially midsize models, light trucks – primarily SUVs and CUVs — now make up two-thirds of all new vehicle sales.
The Accord, which was long one of the country’s top-selling nameplates, has rapidly lost ground, despite strong reviews for the newest version of the sedan, launched for the 2018 model-year. Demand was off 3.1% in July and has tumbled 5.9% for the current calendar-year. In contrast, Honda’s long-popular CR-V crossover gained 2.5% in sales last month.
Honda has been able to pick up some ground with its compact Civic line-up of coupes, hatchbacks and sedans, but the overall weakness of its passenger car line-up has helped drive the brand as a whole 1% into negative territory for the first seven months of 2019.
And that downturn has one of the key reasons why Honda reported global earnings during the April-June quarter of just 172.3 billion yen net profit, or $1.6 billion, down from 244.3 billion yen a year earlier. In sharp contract, Toyota reported earnings of 682.9 billion yen, or $6.4 billion, up from 657.3 billion yen a year earlier.
Toyota has moved more rapidly than Honda to shift to a truck-heavy line-up. And it has been aggressive in building demand for its SUVs and CUVs. The RAV4 – a direct competitor to Honda’s CR-V – last year toppled the Camry as the top-selling Toyota. The RAV4 is now the fourth best-selling model in the U.S. market.
But Honda’s problems are far from unique. GM kicked off a firestorm last November when it announced to drop passenger car models like the Chevrolet Cruze and Impala, and close those three assembly plants. It last week also shut down a transmission plant in the Detroit suburb of Warren. Rival Ford is phasing out all U.S. passenger car models save for the long-lived and still popular Mustang. Toyota has hinted it may cut back some passenger car offerings, as well.
Honda has hung on tight after dropping some sluggish-selling models earlier in the decade, but passenger cars continue to account for about 50% of its American sales. It is hoping to bring that share more into alignment with market demands, among other things launching the all-new Pilot SUV this year.
But, for now, it will pull back on production of Accord and those other models in Marysville, the first Japanese-owned passenger car plant in the U.S. market.