Profitable Ridgeline isn't making money for Honda
An article from Bloomberg today reveals that Honda's inventory of the Ridgeline pickup has risen to more than 100 days. The automaker has decided to cut production of the pickup by 3,000 units next quarter in response. While it would have been difficult to predict the current high price of gas that's forcing consumers to reconsider large vehicle purchases, it may be that Honda picked a bad time to take on the Big 3 in the full-size truck segment. Currently the automaker can't keep up with demand for its new Civic and, as mentioned previously, plans to introduce another small car, the Fit, in the U.S. next year. Profit margins on these small cars are much smaller than the money that can be made on the Ridgeline and other large vehicles like the Odyssey minivan. Honda will be raising incentives on its light trucks, which include the Ridgeline and Odyssey, in order to move them off the lot and get its inventory under control. [Thanks Joel for the tip]
Reader Comments (Page 1 of 3)
Mike Homeniuk 11:06PM (12/18/2005)
The Ridgeline might be a bigger hit, if, in addition to it's innovative features, it trumped it's competition in regards to fuel economy. Unfortunately, is doesn't, and therefore, isn't.
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Erik 11:06PM (12/18/2005)
Honda has always done great with small cars in terms of sales and profit. They should stop messing around with things like the Ridgeline and just stick with the winning formula.
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Realist 11:06PM (12/18/2005)
A number of problems:
The main problem is that this truck was designed and engineered for your typical Honda buyer who, unfortunately for Honda, are very rarely on the market for a truck.
Second: This truck is waaaaaaaay too hi-tech and innovative for the typical truck buyer, whose idea of hi-tech does not go beyond 70's technology (ie. hemi). The external design sets it apart from other trucks as well. It so screams "urban" rather than trailer-park.
Third: The usual complaints regarding function - not enough cargo space, heavy fuel consumption, etc. But let's face it, even if Honda were to rectify these shortcomings, I doubt your typical truck-buyer would consider it anyways.
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Banker 11:06PM (12/18/2005)
Maybe it has something to do with the fact that this is a crossover with a bed and not a true truck. Or, the fact that they copied the styling of the Avalanche - a vehicle that many Honda fans hated for its looks.
Maybe it has something to do with the public not wanting to buy a truck based off of a minivan.
At least Toyota and Nissan designed a specific truck platform to use and didn't try to sell a car/minivan based truck to the truck crowd.
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Sean 11:06PM (12/18/2005)
Actually, IMHO, the biggest problem with the Ridgeline is the price. It's too expensive. $30-35k vs a full size QC Dodge at $20k?
I can buy a LOT of gas for $10-15k.
Oh yeah, and the interior door handles are the ugliest thing....
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Glenn Arlt 11:06PM (12/18/2005)
I think the Ridgeline is highly ingenious, being as it is not made on an antique basis (body-on-frame) but is unitized welded construction like modern cars, minivans and yes, aircraft (except aircraft are riveted).
If I needed a pickup, I'd look at the Ridgeline. But of course, being intellegently designed means it isn't a great seller because most truck buyers (let's face it) um, how can I put this, oh hell I just have to write it - don't use their heads except as hatracks for their baseball caps.
Honda intended this vehicle as a smarter alternative to "usual" trucks and was aiming it towards urban folks. The gas price spike probably has more to do with the low sales because urbanites are now turning away from SUVs and trucks.
In other words, it was just bad timing. Something Detroit should know alllll about.
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Banker 11:06PM (12/18/2005)
The external design sets it apart from other trucks as well. It so screams "urban" rather than trailer-park.
So the Avalanche is urban and the F150 King Ranch or Silverado Z71 are trailer-park?
Give me a break.
Real truck buyers need a V8 to tow trailers, body on frame to handle the weight of the trailer and in case of a flat tire - they don't want to unload the bed to get to the spare tire.
For $30K - I could get V8 crew cab with leather and a real bed.
Honda just missed the mark on this one.
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JohnJohn 11:06PM (12/18/2005)
as someone who loves pickups trucks i'll tell you whats wrong with it. It's....it's...a foreign vehicle! I wouldn't be caught dead in a pickup from overseas. Give me a Silverado, an F Series...or even a RAM ...but no, I don't want a Tundra, Ridgeline or Raider!
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Realist 11:06PM (12/18/2005)
Quote:
"i'll tell you whats wrong with it. It's....it's...a foreign vehicle! I wouldn't be caught dead in a pickup from overseas "
Uuuh... Sorry to break this to you dude but those "foreign" trucks you mentioned were actually built here in North America? Maybe what you really meant was that they are Japanese and that just won't cut it now would it.
But you're right though in that you are the typical truck buyer. Your reasoning proves this.
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Dave 11:06PM (12/18/2005)
JohnJohn, you certainly don't speak for all truck buyers. I know a lot of people who swear by Toyota trucks. My stepfather is one of them, and his '88 SR5 went 12 years and 202k miles with nothing more than regularly scheduled maintenence. Never left him stranded, and when he traded it in for his new Tacoma, the dealer gave him $2k. It even had the original clutch!
I think Banker is more on target... you could get away with the Ridgeline in the compact pickup segment for at least $10k less. "Lifestyle" truck buyers probably look to that segment and innovation could be welcome there. But full size pickups are workhorses and need to be equipped as such. Toyota learned the hard way with the T100. They came back with the Tundra and they are now headed in the right direction. V8s, towing capacity, ladder frames... it's the opposite of innovative and it's just what this segment needs.
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Banker 11:06PM (12/18/2005)
JohnJohn
Well said. The same was true of an exotic sports car. Funny how Lamborghini and Ferarri can sell as many as they make, yet Honda can't sell the extremely reliable NSX to save their lives. If someone wants an exotic sports car they go to an exotic brand - Ferarri, Lamborghini, Bentley, Aston Martin, Etc.
If they want a truck - they primarily go to GM, Ford and Dodge. That wont change. With GM about to release their updated trucks and SUVs it will make it harder for Honda, Toyota and Nissan to sell their truck products.
Sorry. America has the world beat in this segment. Thus the disapointing sales of the Honda Avalanche - I mean Ridgeline.
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Meek 11:06PM (12/18/2005)
I think the problem with the Ridgeline had to do with window decals. You see tons of the stickers with the little boy taking a piss on Ford or Chevy. But you don't see the boy pissing on Honda. Before Honda can seriously enter this segment, they need to get to this level first.
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Banker 11:06PM (12/18/2005)
Dave,
I think JohnJohn was referring to American Car companies. Where the vehicle is made is so fuzzy these days. Also, Toyota has been very successful with their Tacoma. A friend has one and loves it. It is a 99 and he has had no problems.
However, I live in San Antonio TX - the sight of the new Toyota plant that will be building the next Tundra beginning next year - and most Texas truck buyers prefer Chevy, Ford or Dodge. Just look at the sales numbers. The big three sell over 2 million units/year while Toyota, Nissan and Honda sell less than half a million per year. (I am rounding the sales numbers, but you get the point)
Nissan proved that you can innovate in the full size market with their interior and bed features. Honda refuses to build a V8 and will forever be eliminated from the truck market until they do. Honda makes great family cars... that is what they should stick to.
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InformedOne 11:06PM (12/18/2005)
I cannot believe how condescending this group is. Trailer park? Typical pick-up buyers use their heads only for hatracks? The problem with Ridgeline sales is not that people who buy pick-up trucks are stupid, it is because Honda missed the mark for the market. One reviewer in a major car magazine put it best when he said facetiously, "Nothing says pick-up truck like mini-van." This vehicle was based on a mini-van. It is not a truck. People buy pick-ups as vehicles for work or play. They either have to be able to perform (read V8) or cast a macho image. Ridgeline does neither, is expensive and does not deliver exceptional fuel economy. Honda made a mistake.
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Joseph Willemssen 11:06PM (12/18/2005)
Perfect post, Meek.
As for the rest of the thread, it's just more rehashing of the same bullshit we see on every Ridgeline thread - "too expensive", "not a real truck", "not enough power", etc, all in contradiction to the facts.
Bump fuel mileage up on that thing to 4-banger Ranger territory (29 mpg highway) with a hybrid, change the styling to be more "yeehaw", and they wouldn't be able to keep them on the lot.
But, then again, the non-need buyer of trucks (ie, the vast majority of them) buy more for image and feelings of being "manly" than anything else, so a smooth-driving, well thought out vehicle probably is an affront to the image that they so desperately wish to portray about themselves.
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Nathan Jones 11:06PM (12/18/2005)
I think the slow sales have more to do with it being a well executed but ugly truck. They need to do something about the slope/angle of the bed....
NJ
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JohnJohn 11:06PM (12/18/2005)
Realist
Quote:
Uuuh... Sorry to break this to you dude but those "foreign" trucks you mentioned were actually built here in North America? Maybe what you really meant was that they are Japanese and that just won't cut it now would it.
We all know I meant I want a truck from an American company. "Banker" understands.
I want my truck to have C H E V R O L E T or F O R D in big letters on the tailgate. Style wise, the Ridgeline is too streamlined, personally I prefer the trucks of yesteryear anyways.
"If it ain't 15 years old and half rusted I don't wanna look at it"
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WillDaThrill 11:06PM (12/18/2005)
Ha ha, I knew people wouldn't buy into the ugly vehicle thing. The tried it with the Aztek, now this. Althought it isn't nearly as ugly as the Aztek, it's still ugly. You have a great engine Honda, but you can't just go crazy and dump it into anything.
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Inthebiz 11:06PM (12/18/2005)
Realist and Glenn #6 You two represent what some Honda purchasers are becoming...bitter,American bashing elitists. I used to think Honda purchasers were educated folks looking for a good value. Most still are. But to make statements that Americans who buy domestic pick-ups live in trailer parks and use their heads as hat racks!? First, you insult those who live in trailer parks as if your so damn special. I am sure your 7000 sq ft home is just magnificent. Obviuosly, because you drive Hondas, your I.Q.'s must be off the scale! To equate a persons choice of vehicle with their intelligence level or residential circumstances is just plain ridiculous. I personally own an Avalanche and a Passat. I love them both. When it comes time to visit my local Home Depot, my Avalanche does the trick. Same with a sixteen inch snowfalls. As far as the Ridgeline is concerned, I personally think it is a nice vehicle with a great ride, I just think it's ugly. Look, I am in the automotive retail buisness and I can tell you most vehicles are very good, regardless of what you buy. But some of you import buyers are really a special breed. I should know, I run an import lot! Just because you buy foreign does not raise you to a higher level of enlightenment. I think most can agree that when it comes to cars, imports are generally better and the domestics do a better job with full size trucks...for now.
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Joseph Willemssen 11:06PM (12/18/2005)
"To equate a persons choice of vehicle with their intelligence level or residential circumstances is just plain ridiculous."
No, to deny general demographic differences that correlate with vehicle and/or brand selection is perhaps the pinnacle of ridiculousness.
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