Honda Motor Co. Ltd.’s (NYSE: HMC) American Honda Motor Co. did not have a very good January. Sales fell 1.7% year over year, and would have been much worse but for the company’s rejuvenated Civic, which posted a year-over-year sales gain of 43%. After a couple of years in the wilderness, the redesigned 2016 Civic once again leads in U.S. sales of compact cars.
In January the Civic sold 26,741 units, compared to sales of 22,362 for the Corolla from Toyota Motors Corp. (NYSE: TM). In January of 2015, the Corolla sold 27,357 units to the Civic’s uninspiring total of 18,699. In the first 11 months of 2015, the Corolla was the best-selling compact car in the United States, outselling the Civic by nearly 30,000 units. What changed?
In a phrase, nearly everything. When the 2011 redesigned Civic was released into the market, it was not greeted with either enthusiasm or yawns; it was positively disliked. Even Consumer Reports magazine failed to recommend the car, the first time that happened since the first Civic hit U.S. streets in 1973.
The 2016 redesign is a completely different story. Motor Trend magazine named the Civic its North American Car of the Year. Autotrader.com analyst Michelle Krebs said:
Honda sells well in the Mid-Atlantic states where the Jonas blizzard hit over a weekend near the end of January. Nevertheless, as anticipated, the revamped Honda Civic had a spectacular month. Honda finally got this Civic right and that has been acknowledged by critics. Winning the North American Car of the Year award at the start of the month certainly gave it a boost.
24/7 Wall St.Perhaps the most impressive thing about the turnaround in Civic sales is that it is selling very well against all those crossovers and sport utility vehicles that Americans can’t seem to get enough of. It may have something to do with price: the Civic starts at an MSRP of $19,475.
Honda’s stock closed down about 0.4% on Tuesday, at $27.63 in a 52-week range of $26.41 to $36.44. The consensus price target on the stock is $34.31.
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