Honda's Perpetual Motion Machines
By
Rich Smith
October 11, 2004
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There's something to be said for being the "first mover" in an industry trend. Those years of extra experience in tinkering with a new idea can be invaluable in helping the first mover fend off inroads into its business by copycats. Hybrid engine pioneer Honda (NYSE: HMC) proved that rule once again on Thursday, when the 2005 federal fuel economy report came out and gave the company top honors for fuel efficiency. Honda's Insight hybrid gas-electric vehicle won first place in the ratings (in its manual transmission version). Moreover, out of the top five fuel-efficient vehicles, Honda claimed four of the slots: two went to versions of the Insight, two to versions of the company's even more popular Civic hybrid. The company most often cited as leading the pack in commercializing hybrid vehicles, Toyota (NYSE: TM), grabbed just one of the top five slots - No. 2, for its Prius hybrid. (Still, considering that Toyota is in the middle of flooding the American market with Prii, the easy availability of the Prius could well make the No. 2 mileage-getter No. 1 in hybrid sales in 2005.)
Leaving aside the ace-in-the-hole hybrids, Motley Fool Stock Advisor pick BMW took top honors for fuel efficiency in the mini-compact category with its Mini Cooper sedan. General Motors' (NYSE: GM) new Chevy Malibu MAXX won in the large car category, narrowly edging out Ford's (NYSE: F) new offering, the Ford 500. But Ford eclipsed all competitors in the pickup category with both its Ranger and the Ranger's Mazda 2300 twin, posting highway mileage of as much as 29 mpg -- better than a lot of sedans. Finally, Honda showed that even without a hybrid engine, its Odyssey minivan could transport America's soccer moms most cost-effectively.
On the other end of the scale, European carmakers won dishonors for fuel inefficiency. Italy's Lamborghini staked out two of the top five least-efficient slots; Britain's Bentley claimed another; and DaimlerChrysler's (NYSE: DCX) Dodge claimed two more with versions of its Ram full-size pickup.
Fools brave enough to invest in an industry engaged in one of the worst price wars in recent memory would do well to keep any eye on the majors' relative fuel efficiency. With oil prices at or near all-time highs, being able to promise buyers more miles to the gallon should have a bigger than usual impact on manufacturers' ability to move product in the coming months.
When seeking to boost sales, one alternative to making better vehicles is to sell the ones you've got for peanuts. Read about which automakers have taken the easy road in:
Fool contributor
Rich Smith
has no interest in any of the companies mentioned in this article.
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