Honda Retools New Product Lineup, Boosts Profit Estimates

October 27, 2009
2009 Honda Civic

2009 Honda Civic

Honda's reputation as a manufacturer of green automobiles is about to get a little greener: the company is retooling much of its product line, including the popular Honda Civic, to boost fuel economy and keep auto prices low. Given the lingering financial crisis plaguing most of the world and oil prices that have shot from $30 to $80 a barrel in a handful of weeks, Honda's strategy of efficiency-meets-economy seems a smart one.

Honda's guiding principle seems to be refining production in the areas it knows best and limiting expansion of its lineup. Accordingly, Honda has nixed plans for some larger, sportier models with eight-cylinder engines and rear-wheel-drive, focusing instead on smaller vehicles, including hybrids like the 2011 Honda CR-Z coupe. (That ought to help customers keep more green in their wallets, too.)

Honda's biggest news seems to be its plans for the next-generation Honda Civic. The company originally intended to make the revamped model larger than the current one, but Honda has dramatically altered course, telling designers to make the new Civic smaller (at least on the outside). The new plan is to reduce the car's footprint while making the cabin feel even roomier. Intriguing as that sounds, this shift comes fairly late in the new Civic's design process, which could lead to a delayed rollout of the new model.

The impetus for Honda's new policy likely stems from the company's rosy financial data, which has been buoyed by sales of small cars and motorcycles. Honda has now raised its profit estimates for the fiscal year ending March 31, 2010 from ¥70 billion ($760 million) to ¥190 billion ($2.07 billion). And its net profit outlook is now ¥155 billion ($1.68 billion) -- significantly higher than the ¥113 billion ($1.23 billion) projected by nearly two dozen industry analysts. So Jerri Blank was right: there's something to be said for "go with what you know".

[GreenCarReports, AutoNews]

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