Innovation helps Honda handle downturn

DETROIT - The one car company that did OK in '08 plans to do more of the same in the coming year.

While other car manufacturers took advantage of this week's North American International Auto Show to unveil new cars and fuel-efficiency concepts, Honda executives used the time to highlight what they've been doing all along.

"For the last 30 years we have focused on fuel economy and environmental responsibility and we are continuing to do that today and in the future," said Dan Bonawitz, vice president of corporate planning and logistics for American Honda.

Honda was one of a handful of companies that decided not to host a pricey unveil event at this year's show. The one major redesign they launched was for their 2010 Insight, a second-generation hybrid that uses the company's latest generation of Motor Assist technology and design tricks learned in the production of their FCX Clarity fuel cell car to offer a five-door, five-passenger car capable of getting 40 miles per gallon in the city.

The price for the new Insight isn't set yet, but the company's goal is to make it more affordable for consumers wanting a hybrid without the price spike that traditionally goes with it. Honda's current best-selling hybrid, the Civic, sells for about $8,000 more than its traditional gasoline counterpart.

"Honda hybrids have always offered great value, high fuel efficiency and a healthy dose of fun near the middle price range in the Honda lineup," said John Mendel, executive vice president of American Honda. "With the introduction of the all-new Insight, we're opening up Honda's fun-to-drive, versatile and fuel-efficient hybrid technology to an entirely new group of buyers that previously may not have considered a hybrid because of either image or cost."

Honda's long history for fuel efficiency paid off in 2008, when gas prices sailed higher than $4 a gallon. The company still booked losses of 8.2 percent compared with 2007, but compared to the more than 20 percent losses of the Detroit Three, it could be considered a good year.

"I don't think there's any question that Honda is better-positioned than the American companies to deal with what's happening right now," said Ben Tagel, industry analyst for Auto Alliance magazine. "It goes beyond their advantage in research and development. Honda has a reputation that takes years to build and that is a serious advantage at every level."

Honda hopes to take that reputation into the future with the next generation of hybrid and alternative-fuel cars. Last year the company unveiled its FXC Clarity, a car that runs on hydrogen fuel cells. The car is leased out to a few people now and has been declared a success by most of the automotive press. But high manufacturing costs and an absence of hydrogen pumps at the local filling station mean the Clarity won't be in most American garages anytime soon.

"Realistically, we're probably looking at eight to 10 years down the road. Right now, the infrastructure just doesn't exist. We're working on home hydrogen systems, but we're not there yet," Bonawitz said.

In the meantime, the Ohio-built Accord and Civic remain top-sellers and the CRV and Element, built alongside the Civic at the company's East Liberty plant, top the SUV lists. That flexibility of assembly lines allowed the company to switch to making Civics when gas prices spiked and the model's demand grew. It also helps keeps costs down and employment steady, said Edward Miller, senior manager of corporate affairs and communications.

"That's the key to keeping employment steady. Honda's always placed a premium on flexibility. That's one thing that's going to help us a lot in the near future," Miller said.