Despite Honda’s comparatively small drop in September sales - down just 1.1 percent - and increasing global demand for its products, the automaker’s operating profit fell nearly 81 percent in North America during the second quarter. Honda says that reduced demand - down 9.9 percent overall during the quarter - hurt its operating profit.

Honda has revamped its North American production to focus more on the efficient Civic and four-cylinder Accord rather than its Odyssey minivan and Ridgeline pickup, but the automaker still expects 2008 to post a sales decline in North America.

Honda expects North America to be the only market to decline in 2008 and current company estimates put the drop at about 6.6 percent lower than last year.

Honda, has fared relatively better than Toyota, the world's biggest automaker, in riding out the downturn, partly because Honda doesn't make large trucks and tends to be more nimble.....
After joining Honda in 1978, Ito began his career as an engineer designing chassis, the main part of an auto, and was in charge of developing the frame structure for the NSX sports car, which went on sale in 1990......
From 1998 to 2000, Ito served as executive vice president at Honda R&D Americas Inc., where he helped develop the first sport-utility vehicle under the Acura brand, Honda's luxury models. The MDX went on sale in the U.S. in 2000, according to Honda.....

Jun 11, 2009 10:27 AM

YURI KAGEYAMA
The Associated press

TOKYO–Honda is ready to offer bigger vehicles in North America should demand return for such models, as well as the small cars viewed as the Japanese automaker's forte, a senior executive said Thursday.

Honda Motor Co. Executive Vice President Koichi Kondo said working to please the customer has been "a basic company stance'' over its half-century history in the U.S. market. Honda reached its 50th anniversary in the U.S. Thursday.

What's so difficult to predict is whether American consumers will revert to their old tastes, he said in an interview with The Associated Press at Honda's Tokyo headquarters. When gas prices dropped after a surge in the 1970s, Americans returned to buying big models, said Kondo, who headed Honda's U.S. operations from 2003 to 2007.

"It's difficult to see who will emerge the winner, but we want to be a winner," he said of the troubled U.S. industry, which has seen General Motors Corp. and Chrysler LLC file for bankruptcy protection.

For now, Honda is focusing on smaller fuel-efficient products like the Insight hybrid, which has been a hit because of its affordable price of $19,800 in the U.S. and 1.89 million yen ($19,300) in Japan – cheaper than Toyota Motor Corp.'s Prius, the global top-seller.

Honda is promising a sporty CR-Z hybrid for early next year in the U.S., European and Japanese markets, which Kondo said would cost more than $20,000. A hybrid version of the subcompact Fit will follow, he said.

Kondo said he was pushing his engineers to further cut costs for hybrids by several hundred dollars per car and boost mileage by 10 per cent to make the ususally higher pricing of a hybrid worth it for the consumer.

Honda – which makes motorcycles, the Asimo human-shaped robot, as well as Accord sedans – will focus on a limited number of global models to achieve cost savings by producing more of each product, including hybrids, he said.

Kondo said Honda hopes to reach 500,000 hybrid sales around the world in the next year or so.

Kondo said there were some signs the U.S. auto downturn may be bottoming out, but he said a full recovery could not be expected for another couple of years.

Like other Japanese manufacturers, Honda has been battered by the global slump and the strong yen, which slashes overseas earnings. But it has fared relatively better than bigger rivals Toyota and GM.

Analysts say Honda can stage a recovery, partly because it has a strong motorcycle division. Honda has less excess production capacity in Japan, and has a better lineup of small energy-efficient models than its competitors, they say.

"Honda's earning power is proving resilient," said J.P. Morgan analyst Takaki Nakanishi. "Honda is reaping the benefits from the speed and diligence with which it is matching its corporate structure to the changing business environment.''

Kondo – who has worked for a decade in the U.S., about a quarter of his 40-year career at Honda – acknowledged that staying nimble was a challenge as Honda grew. What it needs to remember is its roots as a tiny newcomer in the U.S., he said.

When Honda started selling the Civic hatchback in the U.S. in 1973, it made a major error because it wasn't prepared for the car body rusting from antifreeze salts on winter roads.

It exchanged all the damaged parts, although that cost more than all of Honda's group profits then, and that won respect from dealers and customers, Kondo recalled.

"It may sound like we're trying to sound cool. But the reason Honda is where it's today is because we've always sided with the customer," he said.

Today, it sells and makes more cars in the U.S. than in Japan.

"We are an American company," Kondo said.