Honda brand sales decreased by 2.3% last month compared to the same period last year ending what had been a nine-month straight run on positive growth.  The unexpected decline in sales comes as a bit of a surprise because Honda had recently redesigned strategically important models which should’ve helped improve sales.

When looking at the details, sales weren’t all that bad for Honda last month.  Of the brand’s highest volume vehicles, both the new-for-’13 Accord and redesigned-for-’12 CR-V were up an impressive 35% and 16.5%, respectively. The disappointment fell on the redesigned-for-’12 and refreshed-for-’13 Civic, which was down by 14.4%.

If you recall, the ’12 Civic was slammed by the media last year when it was introduced, prompting an immediate refresh for the ’13 model year.  While the ’13 Civic is a definite improvement over the ’12, Honda has not done the best job in the world promoting the new product to the general public.  This has resulted in low awareness of how much better the new product is in numerous areas (exterior design, and particularly, interior touch points).

At the brand level, Honda pulled back on incentives by over 39% for February, lowering average spending by almost $800 per unit to $1,233.  It’s important to point out that this is the lowest level of incentive spending that Honda has offered since February’07, prerecession, when average incentive spending totaled $1,090 per unit.  Looking at individual models, there was a substantial pullback across the entire brand’s lineup.  The biggest declines were seen on the Insight (115%), Ridgeline (80%), Accord (72%), and Civic (55%).

When Honda dealers were asked about February’s sales slide, many were quick to point out the outstanding deals that could be had last year for both the Accord and Civic.  In February 2012, Honda was still selling the older body style Accord, and even though the Civic was all-new, there were some pretty enticing incentives and lease specials to sweeten the pot.  One dealer said that last year the Civic leased for around $200 per month, whereas this year’s comparably equipped car is currently around seeing lease payments around $245. 

The same goes for the Accord which had a lease payment of around $229 last year, but now the monthly payment stands at $287.  It was also pointed out that no matter how great the product is in these segments, the bottom line payment is still a huge factor in getting a consumer to pull the trigger on a deal.

It will be interesting to see how Honda reacts to its softer-than-expected sales over the remaining days of this month.  Will they goose incentives, increase product marketing, or use some sort of a combination of the two?  One thing is for certain, this is problem that will not fix itself.  Only time will tell, we’ll be sure to keep you updated on Honda’s success as new developments unfold.