Center for Automotive Research - Management Briefing Seminars 2006 - Remarks by John Mendel, Senior Vice President, American Honda Motor Co., Inc.

August 09, 2006

More recently, Civic was the first mass market hybrid vehicle. And, today, the Civic is the only vehicle in the world with conventional gasoline, gas-electric hybrid, diesel and natural gas powertrains. In short, Civic is a microcosm of Honda's effort to use technology to create new value. Because you cannot define an environmentally friendly car only by the numbers. It must meet the needs of the customer in other areas... and that is certainly true with Civic, the industry leader in small car safety.

Some have argued that you can't achieve top rank fuel efficiency and top rank safety in the same package. But the 2001 Civic - that's the last generation - was the first small car to earn the federal government's highest crash test rating. And the new Civic was the first small car to earn the Insurance Institute for Highway Safety "Gold - Best Pick" for its performance in frontal and side impact crash testing.

Based on Honda's Safety for Everyone initiative, the new Civic incorporates a long list of standard safety features - including Honda's Advanced Compatibility Engineering body for enhanced compatibility with other vehicles. None of this was easily achieved. To offset the increased weight associated with these features, our engineers employed a number of technologies including lighter and more rigid high strength steel in 50% of the body. This demonstrates how both safety and fuel efficiency were fundamental goals for this vehicle.

Of course, if you talk to most of our customers, you won't hear about safety, or even fuel efficiency. They'll talk about design, comfort, handling, performance and other characteristics that make their car fun to drive and fun to use. And Civic has that, too. Most vehicles in Civic's competitive set use engines in the 2.0 to 2.4-liter range. But Civic's 1.8 liter engine has the performance of a 2-liter engine, with the fuel efficiency of a conventional 1.5-liter engine. Based on this sort of accomplishment, Civic was the consensus "car of the year" for 2006. That's the point... Civic is an "and" car. Clean and safe and fun.

You would expect a car that creates new value to sell well... and you would be right. Civic sales are up 17 percent over last year. In fact, our inventory is much lower than we're comfortable with. And, while I don't have anything to announce today... we're going to have to do something about this situation down the road.

But this story takes me back to where I started today... talking about the importance of technology in creating vehicles that satisfy both our customer and society. And, in the process, helps a smaller company like Honda both compete in the flat world of the auto industry... and make an important contribution to the round world of the global environment.

You know... it's impossible to come to Traverse City and not appreciate the environment. It is beautiful up here. Maybe this would be a good spot to hold an industry summit on the environment! As an industry, we can work together... or we can view it as a competition. Either way, the goal should be the same. To meet the environmental challenge, even as we meet the challenge of satisfying our customers. Thank you. And I look forward to your questions.