Honda has been relishing strong mini car sales here in its small-car-heavy home market. However, that success has caused the company to think hard lately about its identity as a carmaker. The problem is that Japan is currently undergoing a consumer preference shift. While American shoppers are switching from sedans to crossovers, young Japanese consumers are turning from stylish cars to mini cars. To get back to its roots as a maker of sporty cars that promise driving performance, Honda is pinning hopes on its new Insight sedan to underscore “a fundamental value of automobiles.” They are also exploring a new way to reach possible sedan customers.
The Insight is already getting public acclaim, winning the 2019 Green Car of the Year award at the Los Angeles Auto Show in late November. Kimiyoshi Teratani, Honda’s Japan operating officer said the third-generation Insight embodies driving feel and good design in one package. “Fuel economy, driving and design — we have sought to strike the right balance among these three elements at high levels,” he said. In the U.S., the model is targeted at younger customers with no families to drive around. But in Japan, the Insight is pitched to people in their 40s and 50s who are more familiar with driving sedans. In Japan, young people have shown less interest in buying cars, and many users have been deciding to drive mini cars. Of the top 10 sellers in the first half of this year, seven were mini cars, with the Toyota Prius as the only sedan, in eighth place.
Japanese consumers are also increasingly gravitating toward sport utility vehicles like their counterparts in the U.S., thus cutting further into the market for sedans, which have made Honda globally successful. However, with all this success would this the best time for Honda to introduce another sedan. Honda acknowledged that the overall sedan segment is shrinking at home, but customers now have more diverse choices in the sedan segment. “The new Insight is neither an ordinary sedan nor an ordinary environmentally friendly vehicle,” Teratani said. “I think this is more like a luxury sports-car-type model.” Short-term rental programs can be an effective way to help lower a psychological barrier and make it easier for Japanese consumers to try driving the redesigned Insight and experience its smooth acceleration firsthand. Honda is targeting Insight sales of 12,000 units a year in Japan and hopes to sell more than 20,000 vehicles a year in North America.