Honda's Drive For Young Buyers

Can Honda get its street cred back? For years the Japanese carmaker earned the loyalty of young buyers thanks to the first-rate reliability and sporty ride of its Civic. The high-revving engine and tight handling of the popular compact made it the ride of choice among the trend-setting "tuner" crowd -- West Coast kids who amp up the horsepower to convert cars into cheap hot rods. But when it redesigned the Civic back in 2001, Honda decided it was time to graduate to a more mature market.

Big mistake. In appealing to moms with a more staid and cushy Civic, Honda took the tuners for granted. Even though the new car still performed well on the test track, Honda's rivals made a concerted push for young buyers -- and Civic sales went soft as kids turned to Toyota, Hyundai, and Mazda for jazzier cars.

Now Honda Motor Co. (HMC ) is scrambling to reverse that skid. At the Chicago Auto Show on Feb. 10, it unveiled a concept version of a brand new Civic that is set to hit showrooms this fall. And not just any concept: Honda showed off the performance version of the car -- the racy-looking, 200-horsepower Civic SI. Take that as a less-than-subtle message to Honda's erstwhile fans that the Japanese auto maker is reverting to form. Says American Honda Motor Co. Executive Vice-President Richard Colliver: "You'll see the new Civic go more sporty and youth-oriented."

Honda needs the new car to be a hit. With sales of 330,000 units as recently as 2001, the Civic accounted for as much as a quarter of Honda's U.S. sales and still holds more than 13% of the compact market. Civic's share has ticked up as the compact segment has shrunk, but for the first time its sales -- off 7% from the peak -- have fallen behind Toyota Motor Corp.'s (TM ) Corolla line, which includes the orolla Matrix compact sport wagon.

Honda picked the wrong time to get conservative with styling and performance. Just as it softened up the Civic, rivals were headed in the opposite direction. The Mazda 3, launched in 2003, took a bold design direction and went for tight handling. And Toyota launched its Scion brand with the intention of attracting younger buyers. It seems to have succeeded: While plenty of older, budget-conscious folks have snapped up the Scion, the average age of owners is 30, low by industry standards. And the average age of the Civic buyer? A comparatively creaky 40.

So what is Honda doing to woo back the younger set? The company is providing few details, but insiders say even the base model Civic will get Honda's zippy i-VTEC engine. A sportier suspension is also planned. And the SI concept shown in Chicago looks a whole lot racier, hinting that the new Civic will have snappier design flair than its predecessor.

Analysts say Honda still has plenty of cachet with younger buyers. If the new Civic delivers -- and the new ads don't target young moms with a backseat full of kids -- Honda can reconnect with twenty-something hot rodders.

By David Welch in Detroit

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