Honda Vows to Defend ‘Green Halo’ as Rivals Make Mileage Gains

Honda Motor Co., the automaker that has claimed the best U.S. mileage rating for decades, is accelerating engine improvements as competitors such as Hyundai Motor Co. pose a fuel-efficiency challenge.

Hyundai, South Korea’s largest carmaker, in December said it topped Honda in 2009 model year mileage, citing Environmental Protection Agency data. Figures on the U.S. agency’s Web site put Hyundai models at 30.1 mpg in 2009 versus 29.7 mpg for Honda, Japan’s second-largest carmaker.

“It serves as real bellwether to motivate us even further,” said John Mendel, Honda’s U.S. executive vice president, in an interview at the North American International Auto Show in Detroit. “The gauntlet has been thrown down. We’re going to endeavor to maintain our reputation as the most fuel- efficient automaker for 33 years.”

Carmakers are promoting fuel efficiency and vehicles with advanced power trains to attract buyers after 2008’s record high retail gasoline prices and to meet stricter federal fuel-economy rules. The Obama administration is pushing all automakers to increase average fuel economy to 35 mpg to reduce oil consumption and carbon exhaust linked to climate change.

Honda also must respond to an expanding hybrid model line at Toyota Motor Corp. and more efficient engines from Ford Motor Co. and General Motors Co., said Eric Noble, president of Car Lab, an industry consulting firm.

‘Too Late’

“It may be too late for them to reclaim the ‘green halo,’” said Noble, who is based in Orange, California. “It’s been three generations of Prius and dozens of announcements from competitors.”

Honda President Takanobu Ito said he’s pushing company engineers to focus on engine improvements.

“Of course we want the most efficient engines,” Ito told reporters in Detroit yesterday. “Competitors are catching up and I feel pressure from this. I don’t want to lose out.”

Ito and Mendel declined to discuss specific improvements planned for U.S. Honda and Acura models. “We’ll have some interesting things to say fairly soon,” Mendel said, without elaborating.

Sonata, Accord

John Krafcik, Hyundai’s U.S. chief executive officer, said in interviews in Detroit yesterday and at the Los Angeles Auto Show last month that the company’s new Sonata sedan that goes on sale next month will exceed Honda’s top-selling Accord and other mid-size sedans by using a new direct-injection gasoline engine.

To keep fuel-economy high for all Sonatas, Seoul-based Hyundai also decided not to build a V-6 engine version. Instead for customers seeking more power it will offer turbo-charged, 4- cylinder engine and hybrid versions this year, Krafcik said.

Toyota may also add direct-injection and turbo-charged engines to aid fuel efficiency, Executive Vice President Takeshi Uchiyamada told reporters in Detroit yesterday, without elaborating.

Ito announced in Detroit this week that the company would add the hybrid CR-Z sport coupe in the U.S. by about mid-year and plans gasoline-electric versions of premium Acura models. Honda is also developing a small, battery-electric commuter car, Ito said, without saying when the model will be sold.

Fuel Cells

While the Tokyo-based company, the world’s largest engine maker, has led the industry in developing advanced hydrogen fuel-cell vehicles, it only leased five of the emission-free FCX Clarity cars in the U.S. in each of the past two years.

Honda has also struggled to match Toyota’s success with hybrids, led by Prius, the world’s best-selling gasoline- electric model. Honda’s Insight that was added in the U.S. in 2009 fell short of the company’s initial goal 100,000 units in the U.S. and Canada, with 20,572 U.S. deliveries.

Honda’s U.S. operations are based in Torrance, California.-Businessweek

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