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Honda Expects Best U.S. Sales Since ’07, Executive Says

Honda Motor Co. expects its August deliveries to be up “40-plus percent” on U.S. demand for Civic small cars and CR-V crossovers, buoying a 27 percent annual rise to the company’s best sales in the region in five years.

Deliveries of Honda and Acura vehicles will reach at least 1.46 million this year, U.S. Executive Vice President John Mendel said in an Aug. 23 interview in Santa Barbara, California. That would be Tokyo-based Honda’s best U.S. sales since 2007 as its North American plants work overtime to supply dealers asking for more Civics and CR-Vs, he said.

“We’re running at 120 to 130 percent of capacity at some of our plants, and still it’s my leaky tub,” Mendel said. “When sales are increasing at the same rate your production is increasing, you’re not gaining ground in inventory.”

Honda, Japan’s third-largest automaker, plans to accelerate U.S. sales in 2012’s second half as North American production grows and a new Accord sedan and modified Civic small car are added. Natural disasters in Asia in 2011 pared output of parts needed by Honda’s North American factories. The company’s U.S. deliveries grew 19 percent in this year’s first seven months, aided by a 45 percent gain in July.

Honda’s North American factories made 75 percent more vehicles in 2012’s first half. More than 87 percent of Honda and Acura models sold in the first half were produced in North America, up from 84 percent a year earlier.

The company’s U.S. sales peaked at 1.55 million vehicles in 2007, dropping to 1.43 million in 2008 as deliveries plummeted industrywide because of the recession. In 2011, Honda sold 1.15 million cars and light trucks.

‘Good Shape’

Production is surging to make up for lost inventory last year and dealer shortages that continued into 2012’s first quarter, Mendel said. With industrywide sales continuing to rebound, dealers simply want more vehicles, he said.

“Coming into August, I think we’re in very good shape, in terms of inventory and attitude” of dealers, Mendel said. “Accord is moving very well. Civic is moving well. CR-V is doing well.”

Accord sales gained 28 percent this year through July, while Civic rose 32 percent and CR-V 34 percent. Among midsize sedans, Accord trails only Toyota Motor Corp. (7203)’s Camry; Civic is the top-selling small car in the market; and CR-V ranks as the best-selling sport-utility vehicle.

Increased Spending

Incentives, mainly in the form of discounted loans and leases, have risen particularly on the Accord as the model is soon to be replaced, Mendel said.

The company spent an average of $2,263 a vehicle in July, up 8.9 percent from a year earlier, according to Autodata Corp. While that amount is below an industry average of $2,482, the company now spends more than Toyota and Hyundai Motor Co. (005380) at $1,849 and $829, according to Autodata.

Spending should moderate after the release of the new Accord in September, Mendel said.

“The bottom line is if it’s higher than zero, it’s higher than we want it,” he said.

Honda’s U.S. headquarters is in Torrance, California. The company’s American depositary receipts gained 0.5 percent to $33.33 yesterday in New York. They have advanced 9.1 percent this year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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