Honda Motor Co. Ltd. (ADR) (NYSE:HMC) Trying to Recreate SUV Magic with the New HR-V


Honda Motor Co. Ltd (ADR) (NYSE:HMC) unveiled its much anticipated crossover SUV called The HR-V in Los Angeles International Show last Friday. The HR-V is a bit smaller in size from the CR-V and made on the platform of Honda Motor Co. Ltd (ADR) (NYSE:HMC)’s subcompact fit. The 2015 CR-V was the company’s fastest selling car in October this year; its sales exceeding all expectations. The HR-V is relying upon the boom created by the SUV although it has created a great first impression in the show. The car is expected to be priced around 20,000 dollars.

SUVs and crossovers are making an immense impact on the auto market. Light vehicles in U.S moved up by 6 percent if we compare last year’s October to this year’s October. But data reveals that this year’s October also upped the spending to 8 percent. Revenue has risen faster than volume gains as consumers are shifting from inexpensive Sedans to high end SUVs and crossovers. The first ten months have made 334 billion dollars in consumer spending; for the first time data is close to cross 400 billion dollars.

The revenue isn’t big as it once was five to ten years ago before recession but the lower gasoline prices along with the customer trend to buy expensive vehicles might change everything. Customers also benefit in this regard because the lower fuel price enables them to emphasize on buying the car of their choosing; there is no fear of spending large on maintenance of the car, there is ample money for that. Fuel prices are below the 3 dollar mark for the first time in 4 years.

This will benefit both the customer and the manufacturer. Honda Motor Co. Ltd (ADR) (NYSE:HMC) is benefitting immensely these days. This year the company got 41 percent in total gains made in overall revenues. The CR-V became its highest selling car in America. The company sold 5,100 CR-Vs more than Civics in the month of October and mind you Civic is a renowned veteran and well appreciated by consumers all around the world.

The growth in Honda Motor Co. Ltd (ADR) (NYSE:HMC)’s business is evidence of the fact that consumers are moving towards expensive cars. One more thing: These expensive cars are worth all their money, which is why customers are choosing them over midrange cars or inexpensive cars. The market is getting highly competitive, with the dropping of fuel prices; many companies have upped their production scale. On top of that Honda Motor Co. Ltd (ADR) (NYSE:HMC)’s own segments are at war with each other.

Honda Motor Co. Ltd (ADR) (NYSE:HMC)’s Vezel, which is known to be the parent of CR-V, was tested in Japan to applause. General Motors is beefing up the competition by posting great sales this year. Time will tell what sort of impact Honda Motor Co. Ltd (ADR) (NYSE:HMC) manages to create with The HR-V because it’s being dubbed as the company’s flagship car and it has to prove that it has earned this moniker.