Honda's Euro locked into petrol sedan range

Honda won't be bringing you the company's excellent 2.2-litre diesel engine nor the very stylish Accord Tourer.

Mazda has both wagon and diesel variants of the Mazda6, Subaru's bread and butter is the wagon variant of the Liberty, so why's Honda behind the eight ball? There are various reasons why, but they predominantly boil down to cost.

In Europe for an introduction to the CR-Z Hybrid, the Carsales Network spoke to Honda Australia's Senior Director, Lindsay Smalley about both the diesel for the Accord Euro and the wagon.

Firstly, the diesel...

"There are two issues: supply and cost," Smalley explained.

According to Smalley, Honda's optimised factory production capacity for the engine meets the needs of the major market for diesels -- Europe.

"Honda's current view is, clearly, in a market like Europe where almost everything's diesel, there's an absolute demand for it and Honda's working to supply that market, but in other parts of the world, diesel is not that popular from a passenger vehicle take-up point of view. It still has a fairly poor image, so the direction for Honda is really petrol hybrid-type technology -- moving to hydrogen.

"I don't think diesel, at this point is seen as a core product for the future."

When pointed out that Mazda offers a diesel for the '6', but the Honda engine has the advantage of an automatic transmission option to go with it, Smalley agreed that Honda would enjoy some benefit from that in the Australian market.

"It certainly would give you marketplace advantage, but... the thing that balances that is the cost of bringing it to market."

And the cost would be?

"Hypothetically, between $5000 and $7000 with current cost structures, if it were available… The diesel engine is made in Japan and then exported to Swindon [in the UK]. Then the car's built in Swindon... even that logistics path is pretty expensive."

So what about the very attractive Accord Tourer then?

"We have no plans to introduce Accord Tourer. It would have to come from Swindon."

Straight away then, the Accord Tourer would cost significantly more than the Accord Euro sedan, although Smalley couldn't give an estimate of the price premium for the Tourer over the sedan, since Honda hasn't even attempted to make the numbers work. It's just too far away from what's viable. Smalley also says that the Accord Tourer wouldn't sell in Australia when buyers can opt for the seven-seat Odyssey.

"I think there are a few different issues. Price is one issue, cannibalisation within the product line-up is another issue, but the actual demand for wagon-type cars in Australia -- even the domestically produced ones -- is very, very small. And when you're running a business, you need to look at model line-up efficiency as well as trying to stack your shelves with as many products as you can find.

"From a line-up efficiency point of view, our projected volume within the context of the price of the vehicle just doesn't make commercial sense."

But then Smalley agreed that there's actually greater separation between Accord Tourer and Odyssey than there is between the Subaru Exiga and Liberty wagon.

"You might be correct in that assessment... [but] there are a range of issues," he responded.

So is Honda watching how Subaru fares with the Liberty wagon and the Exiga?

"We've got a product planning department that spends their entire life looking at what everyone's doing, including all of our key competitors," Smalley concluded with a laugh.

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