Honda Still Trying to Complete U.S. Comeback

Honda has fared worse than its two major Japanese competitors in trying to recover from last year's earthquake and tsunami in Japan, as its U.S. market share dropped more last year — and its production bounceback has been slower to reach full stride this year. 

But Honda is looking to its U.S. operations to finally lead a full-fledged recovery for the company. And after April sales in America fell by 2 percent from their year-ago level, today American Honda reported an encouraging 48-percent rise in sales last month compared with May 2011. The overall U.S. market continued its recovery in May, and many automakers reported double-digit gains — but not the size of Honda's.

Of course, it was an easy comparison because last May was the nadir of supply difficulties for Honda. And Honda has been relying on incentives that are much more generous than usual to move some of its models.

But Honda executives today didn't let that tarnish their assessment. "With our best May sales performance since before the financial crisis, it's obvious Honda's return to strength is in full swing, and our May sales are impressive irrespective of last year's production-supply problems," John Mendel, Honda's EVP of U.S. sales, said in a press release. He cited, for instance, the fact that sales of Honda Civic surpassed 33,000 units in May as showing "real demand in the marketplace."

And in fact, Honda executives in Japan as well as the U.S. have been saying that there remains vast pent-up demand for their products among Americans, and that once they could restore full selection to Honda dealerships in the U.S., this demand would begin to show itself fully. "A lot of car buyers have been waiting for the product to arrive," Chief Financial Officer Fumihiko Ike said last Month, according to the Wall Street Journal.

But Friday's results can't mask the fact that Honda recently has had more of its new products fail to catch fire with the American public, such as a Crosstour hatchback version of the Accord in 2009 and an Insight hybrid hatchback in 2010. Last year's new version of Civic also got off to a very slow start amid some unusual criticism by car evaluators.

Yet Honda still has three of the best-selling U.S. cars in Civic, Accord and the CR-V sport utility. And there's a lot of brand loyalty for Honda in the United States, akin to that for Toyota, the No. 1 Japanese brand.

So a lot of people are still betting Honda over the long term rather than betting against the brand.