Honda Loses Market Share (How surprised were we supposed to be?)

By Will Leben

From a naming standpoint, we weren’t surprised at all. The December 30, 2010 Financial Times reports that Honda’s market share dropped by over 5% in the U.S. and by more than 25% in Europe in 2010. Probably there are dozens of technical and business reasons for this. But as a branding company one of the major lessons coming out of this unfortunate news is that bad names affect car sales. Honda’s new Insight is a sleek hybrid with a beginning price under $20,000 in the U.S., and mileage in the 40 mpg range. It drew raves from Car and Driver magazine. Yet the Financial Times reports that sales have been “well below the company’s expectations.”

How could this be?

One reason is that Insight brand isn’t doing this car any favors. Many consumers attuned to hybrids still remember Honda’s original 2000 Insight, a clunky two-seater with low power and not much interior space. Back then the name may have appealed on an intellectual plane with some hopeful early adopters. But given that car’s shortcomings and its failure to catch on in the marketplace, why carry that baggage over to an attractive new car whose main link with the 2000 model is its hybrid status?

Honda’s new sporty hybrid, the CR-Z, also had disappointing sales last year. While to our eye it has less going for it than the Insight in the looks department, it also has a naming problem.

The name CR-Z borrows its name structure from Honda’s popular CR-X from the 1980’s. (The Z will strike some fans of economy sport hatchbacks as having been borrowed from Nissan’s enduring line of Z cars.) But the CR-X brand disappeared in 1992. Hoping that brand equity will survive a hiatus of double-digit years is highly risky, as Ford found when it re-introduced the Thunderbird brand in 2002 and dropped it after 2005.

Interestingly, GM has just introduced a brand with the same consonants as Honda’s CR-Z in the same order, the 2011 Chevrolet Cruze. What a difference those vowels make. While Honda associates its cars with discontinued past models, Chevy uses Cruze to proclaim a fresh start. The link with cruising brings thoughts of fun, carefree operation, and driving as a social experience. The consonant and vowel sounds that make the name Cruze for the most part imply smoothness and comfort.

As the many positive reviews note, Honda has much to be proud of with its new hybrids. But the names it has chosen totally fail to communicate that simple fact.