Honda Sharpens Its All-New 2018 Accord to Steal SUV Sales

FAN Editor

Honda (NYSE: HMC) said that its all-new 2018 Accord sedan officially went on sale in the U.S. on Wednesday. The all-new Accord is a major evolution of Honda’s mainstay sedan: In some ways, it’s more like a German luxury car than like the bread-and-butter Accords of the past.

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But it arrives as sales for the entire midsize sedan segment have been shrinking. Is it doomed to decline, or will the rethought Accord be enough to tempt buyers intent on SUVs?

What makes the new 2018 Accord so different

In an effort to tempt buyers away from the crossover SUVs that have become so popular, Honda took the Accord in an edgier direction. Hondas have always been thought of as a bit more fun to drive than the equivalent models from rival Toyota (NYSE: TM), but Accords before this one were still, to some extent, utilitarian.

This one’s different. The upright sedan roofline of past Accords has been softened into a lower, sleeker “fastback” shape, with a sloping rear roof strongly reminiscent of coupe-inspired luxury sedans like BMW AG‘s 6 Series Gran Turismo and Audi‘s A7. The stylistic luxury-car reference is one part of Honda’s effort to differentiate the Accord as a more “upscale” (Honda’s word) offering.

Honda took the new Accord’s driving experience in a German-ish direction, too. Honda claims the new model has a more rigid structure and a revamped suspension than its predecessor, which together should improve the new Accord’s handling and make it quieter inside. As it did on its latest Civic, Honda also boosted the power of the Accord’s base engine: It’s a 1.5-liter turbo four-cylinder with 192 horsepower, the highest power rating on a base-model Accord ever. A larger 2.0-liter turbo four-cylinder with 252 horsepower is optional. A hybrid version will arrive early next year.

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The new Accord does away with the optional V-6 engines that were offered in the recent past. But Honda has brought back something else that might tempt sporty-minded (or nostalgic) drivers away from SUVs — and away from the Accord’s rivals: In Sport trim, the new Accord is available with a six-speed manual transmission. (Yes, a real one, with a clutch pedal. How about that?)

Why differentiating the Accord from rivals is more important than ever

Things like the roofline and manual transmission might sound silly to non-enthusiasts, but they exist for hard-headed business reasons. The 2018 Accord is arriving at a moment when midsize sedan buyers have more good choices than ever — but the total pool of midsize sedan buyers is shrinking, as more and more American drivers make the move to SUVs.

Vehicle 2017 U.S. sales through September Change from same period in 2016
Toyota Camry 282,507 (11.1%)
Honda Accord 250,802 (3%)
Nissan Altima 199,861 (17.5%)
Ford Fusion 159,742 (24.1%)
Chevrolet Malibu 141,162 (17.2%)

Honda isn’t the only contender in this class thinking that a sportier, more upscale presentation might win buyers. Toyota didn’t go as far as adding a manual transmission to its all-new Camry, but like the Accord, the new 2018 Camry has lower, sleeker styling and an interior with a decidedly sporty take. September was the new Camry’s first full month on the market; sales have been strong.

Likewise, while Ford Motor Company‘s (NYSE: F) Fusion is nearing the end of its current-generation run, Ford added a Sport version last year that combines a hearty 325-horsepower turbo V-6 engine with all-wheel drive. The idea is that it offers some of the flavor of an Audi S6, but for a lot less money.

But the changes raise a question: Given that the trend toward SUVs and away from sedans is looking like a permanent shift, will any of this matter long-term?

The upshot: This all-new Accord should do just fine

I think the answer to that question is in the chart above: not in the year-over-year declines, but in the total sales numbers — they’re still huge. This is still a very big market segment, and for the five automakers with products in that chart (including Nissan and General Motors), it’s very much worth investing in great products that can fight for sales.

When Takahiro Hachigo became Honda’s CEO in 2015, he promised a “new Honda” that would “come up with products that carry dreams and satisfy our customers.” That wasn’t just talk: Like the new-for-2016 Civic, the latest Accord is a sign that Hachigo has successfully refocused Honda on products that stand out and capture attention.

The revamped Civic has been a strong seller in a declining market segment; I expect this new Accord to follow a similar path.

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John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.

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