Honda Succeeds Where Ford Failed

Photo credit: Honda

It's been a rough year for Ford's (NYSE: F  ) drive to go green. Despite investing heavily to deliver its next generation of fuel efficient cars, Ford keeps coming up short. The company's progress was slowed when it was found that its C-Max hybrid failed to deliver on its promised fuel economy. Now, one of its chief rivals, Honda (NYSE: HMC  ) , has taken advantage of Ford's misstep and has zoomed past it in the battle to build the most fuel efficient car.

Honda's latest addition to the fuel economy wars, the 2014 Accord Hybrid, delivered an EPA-certified rating of 50 mpg in city driving. That's three miles per gallon better than Ford's Fusion Hybrid, which had been the top of the midsized sedan segment. It's also well ahead of Toyota's (NYSE: TM  ) Camry Hybrid which came in at 43 mpg in city driving.

To be fair, the Accord Hybrid's highway rating is 45 mpg, which drops its combined rating down to 47 mpg. That actually ties it with the Fusion Hybrid, which also has a 47 mpg combined rating. However, in a day where headline numbers matter, Honda can boast of beating Ford on that all important city driving number. That being said, the Accord Hybrid is also still a bit behind Toyota's popular Prius hatchback, which still leads all hybrids with an EPA-certified 51 mpg city rating. However, for those looking for a gas sipping mid-sized sedan, the Accord Hybrid is now the car to beat.

Despite hitting fifty, car makers still have a long way to go in order to meet the government's aggressive future CAFÉ standards. That standard is set to nearly double by 2025 to a fleet average of 54.5 mpg. As Ford's recent struggles with the C-Max indicates, manufactures don't have an easy road ahead to meet those future standards.

That's forcing manufacturers to take risks in order to deliver the next generation of gas sipping automobiles. In Honda's case, it went away from the industry standard of nickel-metal hydride batteries and instead is using lighter and more powerful lithium ion chemistry. It is a move that does have the potential to backfire down the road given Boeing's (NYSE: BA  ) issues with lithium-ion batteries on its 787 Dreamliner. On the other hand, Tesla (NASDAQ: TSLA  ) uses automotive-grade, Lithium-ion battery technology in its all-electric Model S and has yet to experience any issues with that technology.

Right now Honda's bet on the battery, as well as improvements to the aerodynamics and a more efficient wheel design have taken its Accord Hybrid to the next level. That leaves Ford with a little bit of catching up to do in order to improve its fleet's fuel economy. That being said, this past August Ford did have its best auto sales month since 2006 with sales of its C-Max hybrid contributing to 44% of its growth in the small car category. So, while the car disappointed on miles per gallon, it hasn't disappointed in sales, which is where it really matters. So, while Honda might have won this lap, Ford is still well positioned to win.

Ford might have lost this round but it's positioning itself to win. If you want to join Ford in the winner's circle then you'll want to claim your free copy of The Motley Fool's report entitled, "5 Secrets to Ford's Future." Inside we outline what Ford needs to do in order to make you a lot of money. Click here now for your free report.


Read/Post Comments (32) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 15, 2013, at 10:32 AM, manfrom10ac wrote:

    I would gladly give up a few miles per gallon to purchase a car made in the USA over any other brand. I hope my fellow Americans will share in this point of view. Our future belongs to us. Our destiny is in our hands. Don't let anyone take it away from us.

  • Report this Comment On September 15, 2013, at 10:48 AM, southerncannuck wrote:

    This is a ridiculous hack job of a story. 47 mpg versus 50 mpg is negligible at best in operating costs. Nothing short of meaningless bragging rights.

  • Report this Comment On September 15, 2013, at 10:58 AM, tazcars wrote:

    Honda is the number 1 engine producer world wide. More Hondas' are made in america by Americans than Ford does. Honda is not gambling on battery technology they are using better tech, they make several cars that outsell similar models to Ford. Better resale and several other areas of performance at the dealer.

  • Report this Comment On September 15, 2013, at 11:03 AM, americangrizzly wrote:

    what are the implications of a Lithium shortages? Shouldn't we be moving towards hydrogen it has been around for decades. GM made a truck for the US Army that produces somewhere around 300 hp and 94kw of power produced by hydrogen. Why are they continuing to pursue limited technology (so it can become obsolete in a decade and we junk these vehicles and sell more?). Hydrogen is already being used in some locations around the world. Like Ethanol and lithium aren't these like red herrings, or stop gap tech leading us away from truly good and better technology?

  • Report this Comment On September 15, 2013, at 11:45 AM, llahsramd wrote:

    Mr. DiLallo, this is nothing more than a bash on Dearborn. You either have an agenda, or just doesn't understand numbers (or both). A 6% shortfall on the peak MPG number is not a failure, particularly when the overall MPG rating is THE SAME. I don't know about you, but the majority of my driving is not on the highway. It's around town, below 45 MPH. Also, per KBB.com, a new 2014 Accord hybrid is almost $40G. A new 2014 Fusion hybrid is around $35G. To me, $5K is a considerable amount of money. And to you tazcars, the reason Honda is the "largest" engine manufacturer in the world is because it allows it's name on lawnmowers, portable generators, and weed whackers. FORD doesn't do that; they make road vehicles.

  • Report this Comment On September 15, 2013, at 11:51 AM, brifee wrote:

    This is a totally misleading article, with incendiary headlines backed up with weak data. It should never have been written.

  • Report this Comment On September 15, 2013, at 11:56 AM, Captaindory wrote:

    Winners and losers is a ridiculous assessment. Both F and HMC are great companies who make great cars. If there was a winner, no one would be able to find their car in a parking lot and we would have no choice about what car to buy. Capitalism is what keeps companies competitive and both of these companies succeed in what they do. As far a "headliner" effects, I have heard nothing but good news about Ford's cars, including consumer satisfaction with the Fusion. I own stock in both companies and drive a Honda. Only because it has lasted so long that I don't have a reason to buy a new car, but the last few Ford cars I've rented really impressed me. One thing all car companies need to be mindful of is indoor air pollution. I've vetoed nearly every new car I've tried to buy due to the stench and off gassing of putrid toxic upholstery materials. Honda has been the best for this IMO. As far as mpg, I think the difference is not enough to write an article about.

  • Report this Comment On September 15, 2013, at 12:02 PM, autotek40 wrote:

    Eco-Boost was designed by a German Company.

  • Report this Comment On September 15, 2013, at 12:02 PM, pksloope wrote:

    This is not the kind of reporting I expect from the Fool. Its a grossly biased article and it in no way helps with investment decisions. This is the kind of fluff you expect from yahoo writers, not a financial investment oriented organization.

  • Report this Comment On September 15, 2013, at 12:05 PM, DougD647 wrote:

    Wait until all those Honda's with Lithium Ion batteries start burning up!

  • Report this Comment On September 15, 2013, at 12:10 PM, redhilitez wrote:

    I will purchase a Ford over a Honda because of the cost to repair. Second, Ford 's are reliable. Third, Fords are made in America. Fourth, Ford did not ask the Government for a bailout. Fifth, Fords are built for all sizes of persons, not just tiny people.

  • Report this Comment On September 15, 2013, at 12:20 PM, hunter3203 wrote:

    Redhilitez - Honda is one the most reliable brands out there and routinely is recommended by Consumer Reports. Honda has been making the Accord in the US since 1982 in Marysville, OH. They also make many of their other models here in the US as well. You should check out the specs on the Accord, it's just as big as the Ford Fusion it competes against. That goes for all of the cars in Honda's lineup as well, they're not built for just tiny people.

  • Report this Comment On September 15, 2013, at 12:32 PM, omorin34 wrote:

    The last article written by Matthew I read, (Ford using Al in the Mustang), I accused his mother of eating lead based paint chips. This is another fine example of Matthew's mental retardation in respect to his writing. The truth is, Ford is having some of the best years in terms of growth and designs since the 60's. If one were to calculate the difference in fuel cost between the two, I don’t think it will break anyone's bank. 47 and 50, Really? Oh yeah, sounds like Ford is a complete failure to me. Then he goes on to say that the mileage might be overstated.

    I am an auto / mechanical freak. I rebuild cars and build Experimental aircraft in my spare time. I enjoy receiving auto news but I am attempting to block Matthew's future articles from my home page. I see no value in them.

  • Report this Comment On September 15, 2013, at 2:06 PM, FictionWriter wrote:

    DiLallo's headline did what it was meant to do: Get people to read his article. Kudos. But outside of that it is very misleading to assert that Ford is having a rough year--in green tech or elsewhere. With great product design and quality, sales, stock price, relationship between management and labor, I'd say not bad for a company that didn't have to suckle up to the Federal teet. Coming from a fiction novelist I'd say your article wasn't the thriller that the headline promised but was rather more of a mystery.

  • Report this Comment On September 15, 2013, at 2:18 PM, btc909 wrote:

    llahsramd - get your facts straight. Nobody knows what the Accord Hybrid is going to cost yet. We know the Accord Plug-In Hybrid is 40K.

  • Report this Comment On September 15, 2013, at 2:20 PM, bcweir wrote:

    Those of you who base a car's nationality by the national origin of the name plate are missing the point. So you're going to tell me that buying a Honda Accord or Honda Civic built in Marysville Ohio by AMERICAN workers DOESN'T support American workers, while buying a CAMARO built in St. Therese in Canada by CANADIANS or a Ford or GM truck built in MEXICO BY MEXICANS DOES?

    Please, people. Do your homework. Don't just assume by the manufacturer's country of origin that the car is made there too. The AMERICANS building the Toyota Tundra in San Antonio, TEXAS might beg to differ with you.

  • Report this Comment On September 15, 2013, at 2:32 PM, tuffdeal wrote:

    To respond to 2 earlier comments:

    1. Most Hondas are made in the USA by Americans

    using American made parts;

    2. Hybrids are a copout. They still rely on foreign oil;and

    3. Cars that are 100% electric are a total waste as they rely on electricity to run and that means that they also rely on foreign oil.

    The only way to be nondependent on oil is to emphasize fuelcel development and that will most likely not happen until the big oil companies find a way to make them and control that market.

  • Report this Comment On September 15, 2013, at 2:36 PM, 20kleagues wrote:

    manfrom10AC,

    If you want to buy Made in USA, then you'd want to take the Honda over the Ford. The Accord, like nearly every Honda model sold in America, is made (with mostly US parts) in Ohio, where Honda employs over 30,000. Ford Fusions are still mostly made in Mexico, though there has been a recent push to include more US production.

  • Report this Comment On September 15, 2013, at 2:51 PM, 20kleagues wrote:

    Hybrid MPG is a lot harder to measure than MPG for conventional cars, because the intrinsic complexity of hybrid powertrains (where power is transferred and stored/released between engine and battery, while braking power is salvaged as potential energy) provides the driver with multiple ways to save energy--and increase MPG. In other words, MPG is exquisitely sensitive to the way the car is driven, more so than with regular cars. So, the EPA has a lot of room to 'fudge' MPG figures.

    That's not to say that real-world MPG can't be measured. When thousands of Ford C-Max owners reported MPGs in the 30s, rather than the est. 47 MPG, that's a pretty good indication that the EPA or Ford inflated the figures.

    This isn't anything new with hybrids, either: in 2011, Motor Trend reported that the Fusion and Camry hybrids both got about 34 MPG--lower than the 41 mpg and 35 mpg figures that the EPA quoted for the Fusion and Camry, respectively.

  • Report this Comment On September 15, 2013, at 3:02 PM, 20kleagues wrote:

    Interestingly, nearly all of the class-action suits and consumer complaints about hybrid MPG have been with LITHIUM ION hybrids--the C-Max, Civic hybrid, and Hyundai Sonata hybrid. The author quotes the Fusion hybrid at 47 MPG, which is the same as the inflated C-MAX rating--given that they share a lithium-ion powertrain, I wouldn't be surprised if the Fusion is found to have much lower mileage as well.

    It may be that lithium-ion batteries are more sensitive to climate, or that the powertrains are not as sophisticated as those made for nickel-hydride hybrids (like the Prius), so they aren't able to compensate for power loss.

    At any rate, Lithium-ion tech is too new for there to long-term data on reliability. And safety is still a concern, given the Chevy Volt fires and Boeing Dreamliner fires, all due to Lithium-ion batteries.

    Maybe that is why Toyota is sticking with Nickel-Hydride batteries, for now. And with 43 MPG in the Camry hybrid and 51 in the Prius, which is competitive with Accord and Fusion (which may be inflated anyway), why change? The Prius has been around since 1997 so reliability and safety of Nickel hydride has long been proven.

  • Report this Comment On September 15, 2013, at 3:10 PM, 20kleagues wrote:

    The author makes a good point that Lithium-ion may not be ready for prime time, given the Boeing Dreamliner fires. That said, Tesla sources its batteries from Panasonic, which among other things is known for making virtually indestructible laptops for the military. Laptops use lithium-ion cells, and it's safe to say Panasonic has learned how to keep them from overheating in the desert heat.

    So, if you think Tesla is too expensive ($164/share as of Fri) then consider Panasonic. It's listed on the Nikkei, and it's also in Japan ETFs DXJ and EWJ.

  • Report this Comment On September 15, 2013, at 3:29 PM, anrbfan wrote:

    Ford was finished by the phony gas shortage of the 1970s. Rather than die quickly, lung cancer like, it has been dying slowly, as would a patient with untreated Syphilis. Oil company, and US Government, subsidies, bail-outs, etc, has kept Ford on Life Support, but failed to cure it. I stopped buying Ford, and all other car US brands, in 1973. Since then, I have been driving Volvos, and Hondas, and Kias. Ford's life support has to fail soon....especially if House Republicans shut down the government. Gas, electric, hybrid, nuclear, or whatever...it does not matter. You couldn't pay me enough to induce me to take a free Ford off your hands.

  • Report this Comment On September 15, 2013, at 3:34 PM, mtxjohn wrote:

    Honda's drivetrain is completely different from anyone else-THAT is why they have the best numbers. This author has no idea about cars. AND FYI_Honda BUILDS their own small engines, they dont slap their name on them as one fool suggested. Its superior engineering-period.

  • Report this Comment On September 15, 2013, at 4:15 PM, Lauerja wrote:

    Honda - the worst purchase I ever made. Bought new, top of the line 2008 Honda Odyssey. Back to the shop 12 times first two years. Dealer made all kinds of excuses. After 4 years I couldn't take anymore and got rid of it. I've owned a dozen new Fords, Chryslers, GMs, Renaults, and none of them had the pain of owning a Honda. Think the Honda engine is so great? Wife talked me into buying a lawnmower with a Honda engine. Ran 10 minutes at home before it died. After many similar attempts the dealer came and took it back refunding my money. Never ever will I buy anything again with the Honda name on it. You can keep preaching this propaganda but I know better.

  • Report this Comment On September 15, 2013, at 4:30 PM, ScamuelJones wrote:

    In the past few years, Ford has been putting a POS product, and I would BEWARE of anything Ford! My five year Crown Victoria had the paint blistering and peeling off on the roof and hood to the point that one place over one foot square on the roof peeled completely down to the bare metal! I have already also had to replace the transmission fluid cooler/air conditioner cooler to the tune of over $500! Again, BEWARE of any junk that Ford tries to sell you!

  • Report this Comment On September 15, 2013, at 5:28 PM, PJCHILDS wrote:

    To be fair, this article could have just as easily been headlined "Ford Succeeds Where Honda Failed", when you cite the Ford's superior highway mileage rating.

    Also, to be fair, it should be pointed out the number one reason the compact Prius attains better mileage numbers than mid-size Accord, is because it happens to be a smaller car.

  • Report this Comment On September 15, 2013, at 7:12 PM, a95b20 wrote:

    I hate to disappoint all you but the Honda hybrid is built in ..... THE USA............... Georgia. quit being haters and let them build their cars. Ford is the wrong company to do this anyways..............

  • Report this Comment On September 15, 2013, at 9:49 PM, deanmorse wrote:

    I have been driving a 2006 Honda Accord V-6 and I have gotten over 38 mpg when I drive at 55 mph on the interstate. I have only been back to the dealers for maintenance once for a new battery. The car drives great, is comfortable, has lots of get up and go when necessary, and it looks great as well. I have to say, "I love my Honda".

  • Report this Comment On September 15, 2013, at 10:26 PM, stevenatorr wrote:

    Honda is made in the USA dumba§es by americans. I don't drive ricers but i will take one over a POS ford anyday. ford is made by mazda pretty much anyways. don't believe me look up the POS jocus, mazda engine, trans, suspension etc. GM is #1 hands down Honda #2, toyota #3, Dodge #4, misc #5 and ford is bottom of barrel.

  • Report this Comment On September 16, 2013, at 1:32 AM, rebel9999 wrote:

    I don't know why ANYONE would buy any Japenense at all!!! The Japanese don't buy our vehicles, they NEVER have and they NEVER will!!! Our trade deficit is terrible because too many of you Americans won't buy Ford or GM vehicles which are as good or near as good or better than foreign cars. So whose country do you support anyway, theirs or ours?!! And there is only ONE WAY to REALLY support America and that is to BUY AMERICAN PRODUCTS!!! Patriotism alone doesn't create jobs! Just because a car was assembled in America doesn't mean that all the parts were made in America or that the designers and engineers are in America and SURELY MEANS THAT THE PROFITS DON'T STAY IN AMERICA!!!! BUY AMERICAN BECAUSE NOW MORE THAN EVER US AMERICANS GOT TO START SUPPORTING EACH OTHER ECONOMICALLY WITH JOBS!!!!

  • Report this Comment On September 16, 2013, at 2:46 AM, Connelky wrote:

    I'm no statistician but I'm pretty sure more miles are driven on the highway, not city, so isn't it the highway mpg that is more important?

    Also, everyone who is barking this pro America, "I only buy American no matter what!" You are the reasons American car companies are struggling. If you all had abandoned American cars as soon as there products fell behind, they would have gotten their stuff together and improved their product. But instead they took advantage of the easy sell, which is the idiot who will buy American no matter what.

  • Report this Comment On September 16, 2013, at 12:07 PM, JonRoland wrote:

    In the meantime Volkswagen is coming with its XL1 diesel hybrid sports coupe, at 160 mpg. Not a family car but with tech that may be a game-changer. Those fuel-economy standards seem to be well within reach.

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