Wassup with Sales?

I see this as very simple: 1: Very few people want a car like this. Low performance family sedans are simply out.

And 2: Honda has little interest in actually selling many of this model, because it’s an experimental money loser for them.

Just cuz people here on this forum like their cars doesn’t mean they’re mass market friendly.

 

For sure. Sedans in general have plummeted, at a minimum if people can't sit higher in their car than the cars around them then they at least want a hatchback.

As for money loser, that is quite possible, it is generally believed that most carmakers are into electrics at the minimum because they are not profitable compared to other cars. But they are practically forced to make at least a certain number of them for the CARB credits, that's a pretty powerful carrot and stick. It also gives them that "Green cred" that companies like to have. And I suspect they do worry to some extent that there will be a sudden surge in plugin sales if gas prices go up and they want to be ready.

 

Inventory is an issue. There is not a single Clarity in dealer stock in Oregon

I gave 44 test drives at events over the last 2 weekends (EV Guest Drive events). The vast majority of participants were surprised that Honda made a plug-in. Interest was split relatively equally between the PHEV and BEV versions. At least half commented that they preferred the ride comfort over any of the Teslas (S,X & 3) they tested. If Honda had inventory on either/both version, sales would have reulted. EV Insider follows up with all the participants (they do these events almost every week), and historically 30% of all those taking test drives buy an EV within the following 6 months. Hearing abut vehicles from owners that have experience is a big part of the reason.

 

Again the statement about sedans was a general one, in total sedan sales have been declining while some other categories have increased. Looking at specific models you can find some exceptions notably Accord and Camry.

Also comparing a PHEV to a popular car like Accord the numbers are naturally going to look different.

 

It may be a mistake to look for one single answer. There may be multiple factors involved. As has already been pointed out, the problem may be that Honda has reduced the supply of units it's providing to its dealers.

But step back, and ask why Honda would have done so. A drop in demand? A problem with battery supply? The tariffs imposed by four-five (the current U.S. president) making it less attractive to sell the Clarity PHEV in the U.S., as opposed to selling it in Japan?

One thing I think is missing from any discussion of a drop in EV sales is the context of the overall car market. Overall, car sales are down this year. It would be interesting to see a graph of Clarity PHEV sales superimposed on a graph of international automobile sales. Perhaps the drop in Clarity PHEV sales is mostly just a reflection that the overall new car market is down this year?

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I think if we look beyond Honda, that graph somewhat proves my point....with the complete elimination of Impala, Fusion, Cruze, Focus, Taurus, etc etc...you’d think Accord and Camry sales would start to go thru the stratosphere due to people seeking out sedan replacements for all those exceedingly popular cars that are no longer available. But they haven’t. Accord sales remain flatish. Because most of those customers who would have otherwise bought a family sedan switched to some sort of SUV instead...cuz much of the general public is done with 4 door sedans.

And yes there are always exceptions. Frankly it disappoints me that sedans are generally floundering along with Clarity, as I’m a car guy thru and thru and really dislike SUVs. But I’ve learned over time that my tastes rarely follow what is popular...and I realize that the fact that I kinda like the Clarity makes me rather odd. Most people have no use for this car and no interest in it, and I fully understand and accept that truth.

 

You all got me curious so I searched all the Honda dealers in VT (not many). All except 1 had at least one Clarity, all 2019. My local dealer had 2.

 

Compared to the Prius Prime, which is available in all 50 states, the Clarity is technically available in all 50 but less than half the states really sell any.
For the Pacific Northwest, CA, and northeast, the number of sales is highest there due to ZEV adoption.
If only Honda would equalize the ZEV incentives by giving out great rebates in non ZEV states, the Clarity would sell better.
If I was in a non ZEV state, the price of the Clarity is too high and not worth the price even if fuel prices were $4+ / gallon (like in So Cal)...
For the same amount of money as the Clarity, I'd rather spend the same amount on a BMW or Audi and get a sports sedan since most states have very low gas prices.

Also compared to 2018, is that the foreign importation taxes have increased the cost of the Clarity.
Since the Clarity is made in Japan, and subject to higher importation taxes, one can see that Honda is not giving out incentives as much as they used to....

 

One data point, but I'm afraid it's typical for much of the country. The closest available Clarity stock (according to cars.com) is 250 miles from me, three 2018 base models, two white and a black. Last year when I was in the market, things were a little better - I had to go only 50 miles to do a test drive. The person at the dealer could spell "Clarity" but barely. I also investigated the Prius Prime at a Toyota dealer in the same city, and the sales person was relatively well informed.

My assessment of why the sales are so dismal is a perfect storm of reasons. Demand overall for any kind of car with ecological advantages is low because of low gas prices. Sedans seem to be hit even harder. Honda is throttling supply, and they're not encouraging dealers to sell the car; in fact, it's almost like they're going out of their way to discourage it and that may be because they want to keep fleet numbers low. Dealers are worse than clueless, and many of them have abandoned the model completely. BEVs are becoming more of a factor. The PHEV concept is difficult for the typical consumer (sad, but true).

I think that the only thing that will reverse this trend is a significant shift in consumer attitude triggered by things like high gasoline prices and improved rebates. Neither of these is likely in the short term.

 

Checked Mohawk Honda, Albany, NY. They have one base model today (late June, 2019).

In February when they were still doing the $200/mo leases (along with fed and state incentive pass throughs), they had somewhere between 9 and 12, a mix of 18's and 19's in base and touring.

 

I think you are getting closer to the truth. From a sales standpoint, it makes no sense in one of the greenest cities in the US (Portland, OR), Clarity's are either scarce or non-existent. And on 12/18 they were relatively abundant- and 2019's with the 6k manufacturer funded discounts, flew off the lots. 2018s at the beginning of the year were actually selling for more than the 2019s because of the 6k incentive. Only dealers that had 2019s would even disclose the incentive- and not all at that. And as the year progressed and 2019s evaporated as quickly as they appeared, great lease deals sprung up for the aging but new 2018s.

I think Honda needs to make a public statement on the future of the Clarity. I strongly believe it is not the car itself that is holding back sales, but their distribution/supply and promotional strategy. It is hard to believe the PHEV models are unprofitable, so what gives?


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The PHEV has a battery that is ~8kWh smaller than the BEV.
If Honda is paying $250 per kWh, that would give them ~$2,000 to add in the entire engine, second electric motor (generator) transmission, exhaust system with catalytic converter, fuel tank, etc.

Why would the PHEV be more profitable than a BEV?

 

My price for my Honda Clarity Touring model will be $22500 before taxes after federal and state rebates. And I’ll save $1000 in gas if CA gas prices stay close to $4 gallon, which with constant gas taxes CA adds on it should be very possible. How are you buying a BMW or Audi for that price????? I just calculated with the $6k off MSRP dealer incentives and the $9000 in rebates it was kind of a no brainer.

 

I doubt- no I know the fuel cell version is not profitable. I said nothing about the electric- especially with its paltry battery.. As for the PHEV, I would assume if the Volt could be profitable, so could the Clarity- and the large number of other competing plugins. But Honda knows for sure.

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I don’t assume any of them are profitable....links below have articles that have been posted here before of this concept, by some outfits that supposedly did a studies on this issue and put some numbers on price to produce/money lost for EV production. Certainly a PHEV costs even more to build than an EV with the whole redundant drivetrain thing thrown in the mix:

https://www.greencarreports.com/news/1110563_chevy-bolt-ev-costs-28700-to-build-tesla-model-3-a-bit-higher-analysis

https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/making-electric-vehicles-profitable

Same problem followed Hybrids for years. Toyota succeeded with Prius eventually, but their timing was stellar...they started offering and really marketing those cars when gas was expensive and there was a demand for small economy cars that got great mileage. And then they spent 15 years building economy of scale, high volume sales, and proving the worthiness of the car. In contrast Honda spits out the Clarity right when gas is cheap and the whole world has moved to SUVs and started kicking sedans to the curb. On the plus side for them they never once said this was going to be a high volume car for them so that is all irrelevant. To me it is obviously a giant field beta test for Honda and nothing more. I believe they’ll do something smarter with the tech and their test results, rather than just try to sell more Clarities, someday in the future.

 

I suspect or at least guess that the primary reason for Clarity was the electric and fuel cell versions for California and that they already expected those will be limited volume. They seem to get CARB credits on those AFAIK even though Honda retains ownership and the cars will presumably never go into private hands, at least not the ones currently on the road. They also AFAIK get higher CARB credits on those than on PHEV. Although PHEV helps also for CARB credits so they decided to make a PHEV also. And it can also help in other ZEV states outside of California where electric and for sure fuel cell are not as applicable. They may have even thought they could make a small profit on PHEV or at least break even which would help with economies of scale, so they were made available for sale at least to a certain extent in all states. They may have been surprised though to see that even with the maximum tax incentives people still won't buy it without massive discounts, which may be negating even the break even idea. Thus what seems to be an even further retrenchment away from non-ZEV states.

Sorry PHEV fans I guess I contributed to the problem by not buying one until I could get nearly an $8,000 discount. Although I was considering it for $3-4K discount, in Georgia a $6K discount like some ZEV states were getting seemed unattainable. But then there was a sudden dumping of 2018 models in Georgia and a couple of other nearby states so I jumped on it. The assumption was that 2019's were on the way, but as it turned out they haven't arrived in our states yet other than a few aberrations that probably got shipped here by accident

 

Drop the price???? After Fed rebates likely continuing for years the Clarity costs less than a standard Accord!!! Honda is already likely not making much money on the car. They just need to advertise more and get dealers to push it more. I had not problem convincing a friend to buy it instead of a Prius with one quick test drive

 

except its not the same amount of money. Fed rebate of $7500 plus state rebates of ~$2000 makes the Clarity MUCH cheaper

 

I don't think the drop in the sales figures has anything to do at all with the desirability of the car. I simply don't think Honda is that interested in selling the Clarity because they make more money selling gas cars. The only reason the Clarity exists at all is because of the ZEV credits. I would think they are also learning a lot from the Clarity for the days when battery prices come down and they can make more money selling them, and other cars like them. Somebody mentioned above that Honda is no longer offering the .9% financing? That is a big deal. I bought mine because the lease deal they gave me was fantastic, too good to pass up. If they have cut back on the deals, they will sell less. Too me, it's all about how many Honda WANTS to sell.