1
NEWS
Honda fighting green turf war
But local arm is hamstrung by costs of importing 'Earth Dreams' technologyHonda Australia has taken its first tentative steps down the same path that Mazda is following with its SKYACTIV program. But Honda's equivalent, Earth Dreams, apparently brings with it costs that are nightmarish in our local patch of Earth.
To date, the only ready example introduced here is the Civic DTi-S – an enjoyable and affordable small hatch imported from the UK. According to Honda Australia Director, Stephen Collins, the diesel Civic isn't necessarily the opening trickle of a flood of new cars from the UK or North America. It has been brought here – and the CR-V diesel to follow is in the same basket – because Honda is losing market share through lack of diesel options that other companies can offer.
"The situation on Civic diesel is that we were really keen to get the first of the Earth Dreams technology engines to this country. That Civic diesel, out of the Swindon factory in the UK was the first available to us," Collins told motoring.com.au last week.
"Our strategy changed a little bit, probably 18 months ago, whereby we really recognised that the diesel market was an area we weren't playing in – and we needed to, which was somewhat different from our position some time ago," Collins explained.
"Sourcing out of Europe is not cheap, but we just thought that that diesel Civic hatch strategically was important for us."
That the Civic with diesel power undercuts the prices of Mazda's current diesel Mazda3 (and the petrol-engined SP20 SKYACTIV) appears to be quite an achievement, albeit with a smaller-displacement engine that develops a lower level of torque. And the diesel Mazda3 is not yet powered by the SKYACTIV-D engine already sold here in the CX-5 and Mazda6. When the new Mazda3 arrives with diesel power in the future it will presumably deliver something like the torque figure of 420Nm for the Mazda6, but there is also the possibility it will be cheaper than the current Mazda3 Diesel.
One of the key development criteria for SKYACTIV has been keeping new technology affordable – to run, to service and to purchase. But that element of Mazda's philosophy hasn't scored the same precedence in Earth Dreams, it seems.
"Given that it is a new technology engine, cost is always an issue," said Collins about the Earth Dreams diesel in the Civic. "But for us it just made sense to fill that demand and really get the first diesel into our line-up."
However – and despite appearances – the Honda Australia boss argues that affordability is an integral part of the Earth Dreams strategy.
"Clearly it is... We've got the new Accord. Although it's a petrol engine there are some components that are Earth Dreams technology, so clearly cost and making it more affordable to consumers is a part of the longer-term strategy. And that comes with [sales] volume, and it comes with lowering production costs and so on, so we're certainly looking to make Earth Dreams more mainstream with future models we introduce.
"That diesel engine was the first of it, Accord's now got Earth Dreams technology and future engines that we'll be introducing will also have similar technology. So affordability is a huge key to that."
The fundamental problem for Honda Australia is that the Swindon plant is based in the UK, which is an expensive part of the world for sourcing cars. Vehicles imported here from the UK are purchased in Pound Sterling, says Collins.
Not only has the Australian dollar recently lost value against the US dollar, the exchange rate with the British currency is no longer as favourable either. Apparently the arrangement to source the Civic DTi-S from the UK was made during a window of opportunity when the Australian dollar was worth significantly more. Is that window of opportunity still open, Collins was asked.
"It is, it's not as good as it was," he replied. "But my view is the whole currency thing is swings and roundabouts. We had a period there where we were sourcing out of the UK [and] it was very good for us. It has deteriorated – [but] not as much as the US dollar..."
The good news for Honda fans in Australia is that there are no immediate price rises looming on the horizon as a consequence of the Australian dollar losing value.
"We're certainly not looking at any particular price increases, whether it be the hatch out of the UK or any of our other product. The market's just that competitive... Price and value for money are so important.
"My view is that whether it's sourced out of the UK, or whether it's sourced out of Thailand or Japan, we're always dealing with these currency fluctuations, and the Aussie dollar is volatile, and we have to deal with that on an on-going basis."
"There are times when we're in a positive situation, there are times when we're negative. But over a reasonable period of time it tends to level out..."
All the same, what it spells for Australian consumers is that Honda will only bring green technology where it can turn over respectable sales volumes to get a good deal from the factory; the diesel CR-V being one such example. Anything below a certain sales projection remains off the radar. That includes the Accord Tourer we sampled in Europe just over three years ago, or the diesel engine for the mid-size car. Collins sees the problem for any wagon, either the Euro Accord or the Civic Tourer, as being one of appeal versus cost. In Australia the premium asked for an imported wagon is amplified, but that's also partly because they no longer sell in the same numbers they once did – not with SUVs so much more attractive to the market. That's why we will see a diesel CR-V, but not a diesel Accord Tourer.
"I think that's true, cost is one part of it," says Collins. "But also the wagon segment is a pretty small segment, and then of course, when you split it up again between diesel it becomes even smaller. So the way I would answer that is we will be looking at some niche models...
"For us, wagons – and particularly diesel wagons – become very, very niche. But where there is a clear role... then I think there's a strong possibility..."
Read the latest news and reviews on your mobile, iPhone or PDA at carsales' mobile site...
Don't forget to register to comment on this article.
Share this article
Written byKen Gratton
See all articlesOur team of independent expert car reviewers and journalistsMeet the team
Stay up to dateBecome a carsales member and get the latest news, reviews and advice straight to your inbox.
Subscribe todaySell your car with Instant Offer™
Like trade-in but price is regularly higher
1. Get a free Instant Offer™ online in minutes2. An official local dealer will inspect your car3. Finalise the details and get paid the next business day
Get a free Instant Offer
Owner reviews for Honda Civic 2013
Average rating8 reviews
4.2
Looking for a family car?Get the latest advice and reviews on family car that's right for you.
Explore the Family Hub
Related articles
Disclaimer
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
Love every move.
Buy it. Sell it.Love it.
®Contact
Advertise with us
Local marketplaces
International marketplaces
Scan to download the carsales app
Want more info? Here’s our app landing page
App Store and the Apple logo are trademarks of Apple Inc. Google Play and the Google Play logo
are trademarks of Google LLC.