The Honda Motor Co. Is Looking at an Action-Packed 2014 in the U.S.

Honda Motors’ American market looks to be in great shape with the automaker targeting to hit record sales in 2014.

Feb 3, 2014 at 7:01PM

The Japanese automaker, Honda Motor (NYSE:HMC), is becoming more American with every passing year. It's basking in the glory of hitting 2013 vehicle sales of over 1.5 million, and it is expecting to register record sales of 1.6 million in the current year. Honda generates more than one-third  of its sales from the U.S. market, and its cars -- like the Accord sedan and Civic sub-compact -- are all top-selling vehicles in their respective segments. With more innovation, newer technologies, launches of exciting new cars, and interesting collaborations in the works, the coming years are expected to remain eventful for this Asian automaker. Let's take a closer Foolish look.

Honda's fittest Fit yet
Talking about upcoming launches, there's a lot of excitement over the all-new 2015 Fit sub-compact hatchback that is already a big hit in Japan. Honda showcased the car at the 2014 Detroit auto show, and will roll it out from its new facility in Mexico -- slated to churn out 200,000 units per year when in full swing. Obviously much will depend upon Honda's ability to market the new car -- the current model sees annual sales of approximately 53,000 units and holds 10% market share in the U.S. sub-compact segment.

The 2015 Fit would be roomier and more powerful than its predecessors with a new four-cylinder, 1.5-liter engine capable of producing 130 brake horse power. In terms of fuel economy, the new Fit is estimated to give about 36 miles a gallon. And a price tag of around $16,000 seems quite reasonable.

Honda should watch out for Ford (NYSE:F) whose new 2014 Fiesta could give the Fit some stiff competition, especially since there has been a lot of chatter about the car's outstanding interiors and sporty look.


2015 Honda Fit. Source: Honda

Getting on the CUV bandwagon
In December, Honda unveiled its first ever "Crossover Utility Vehicle", or CUV, version of the Fit called the Vezel in the Japanese market, and reportedly received a remarkable 24,900 bookings within just 24 days. The Vezel is available in two variants -- one with a 1.5-liter i-VTEC petrol engine and the other with an eco-friendly i-DCD powertrain that combines a regular 1.5-liter gasoline engine with a 30-bhp electric motor.

Petrolheads might snigger at the Vezel's lack of power but in an era of ever-rising gas prices, buyers may let the savings do the talking. Fuel economy of the hybrid version comes at a staggering 63.5 miles per gallon. While the car is slated to hit the European markets in 2015, the U.S. would get it by the second half of 2014.

A hydrogen-powered future
Honda has reaffirmed its commitment to making hydrogen-powered cars a reality for many more people, and this could be the best way forward toward a zero-emission future. The reason being that hydrogen-powered cars can be refueled in a few minutes, unlike battery operated ones that take hours to recharge. Hydrogen cars also provide more mileage than electric cars. The catch is that it is a nascent technology and the vehicles are very costly to produce.

Honda has built the first hydrogen model, the FCX Clarity, and leases them at a monthly rental of $600 in California.The automaker's next hydrogen car is coming out in 2015. Its bigger rival Toyota (NYSE:TM) has also unveiled plans to introduce hydrogen-fuel-cell cars by 2015. Both companies are part of the California Fuel Cell Partnership that is working on promoting hydrogen cars in California.

Toyota has attracted lot of attention by saying that it will achieve 95% cost reduction on the production version of the car compared to the cost of early U.S. prototypes. The car can be in the market at an approximate sticker price of $50,000 in 2015. So it will be interesting to see how this industry evolves in the future.


2011 Honda FCX Clarity. Source: Honda

Open Automotive Alliance
Honda has joined with Google, chipmaker Nvidia, and fellow automakers GM, Audi, and Hyundai for integrating Google's popular Android mobile operating system with car infotainment systems. The alliance is working with the National Highway Traffic Safety Administration to ensure the safety of the integrated systems.

Until recently car companies have preferred to build their individual customized systems instead of falling for every gizmo that has been the flavor of the season. But tablets and smartphones are rapidly changing the scenario. Car owners are increasingly using mapping services that come free with smartphones to replace the expensive navigation systems found in cars.

Ford had partnered with Microsoft for its MyFord Touch system that integrated mobile devices with cars and had features like voice commands. So, Honda's move is timely, and this will make its cars more relevant for the current generation. The first batch of vehicles with Android integration may be in showrooms before the end of the year.

Foolish last word
America has become Honda's second home dues to high sales and a big production base. The company is showing its commitment to U.S. buyers by bringing out vehicles that appeal to Western tastes while investing in new technology and innovation. It is on an excellent growth path that should add to the company's performance in years to come.

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4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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