Honda sees tiny HR-V scoring home run even if fuel prices rebound

TOKYO (Bloomberg) — Honda Motor Co. just made the biggest splash with a tiny crossover the U.S. auto market has ever seen.

Even before starting an advertising campaign, Honda has sold 6,381 of its new HR-V crossover in two weeks, triple what any other automaker has managed in the first month with a new model in the segment. That has led the company to weigh its options to meet the better-than-expected demand.

Honda’s bigger CR-V is the best-selling crossover through May, a beneficiary of lower gasoline prices that have fueled the auto market to its fastest sales pace in a decade. With the HR-V, a taller twin to the Fit subcompact, Honda is betting that smaller models will withstand a slowdown the next time pump prices rebound.

“This is a small crossover that people will look at as the ultimate hedge against everything,” John Mendel, executive vice president of Honda’s U.S. sales unit, said in a phone interview. “I think, personally, the car is going to be a home run, but we’ll bear that out over some time.”

Honda needs the HR-V, which starts at $19,115, to be a hit. Its U.S. market share this year through May was on pace to shrink for a third consecutive year, putting Honda on course to end 2015 with its worst showing in a decade.

Called the Vezel in Japan, the HR-V struggled along with the Fit due to multiple recalls. Those lapses, combined with difficulties opening a new plant for the Fit in Mexico last year, led Honda to delay its U.S. introduction.

Youngest lineup

Bank of America Corp. now sees Honda as the best-positioned automaker to gain U.S. market share through 2019. Honda will have the youngest lineup from the 2016 to 2019 model years, replacing vehicles that represent about 96 percent of current delivery volume, according to the bank’s “Car Wars” report released this month.

Lisa Damele, 57, a bank teller living near Albuquerque, New Mexico, might have given Honda a pass if not for the HR-V. The CR-V was too big for her needs, and the Fit too small, when she was shopping for a replacement for her Jeep Liberty.

“The dealer told me they were going to make a new one right in between that size, so I waited a couple months and bought it the first day my dealer had one,” said Damele, who uses the HR-V’s new collapsible seats to make room for the potted plants she takes home for gardening.

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