Honda Positioning Fit as Premium Subcompact

By Christie Schweinsberg

WardsAuto.com, Feb 3 2006

The Japanese auto maker offers a first-in-class 5-speed automatic transmission, and adds paddle shifters for the premium trim’s automatic gearbox.

SANTA MONICA, CA – As just one of many entrants in the subcompact market this year, American Honda Motor Co. Inc. knows it has its work cut out in selling its new Fit 5-door.

Already a hit in Europe where it is known as the Jazz, and in Japan, where it was the second best-selling car last year, the Fit will be competing in a suddenly hot segment in the U.S., against models due this year from Toyota Motor Sales U.S.A. Inc. (Yaris) and Nissan North America Inc. (Versa). (See related story: Toyota Takes Shot at Frugal Chic)

South Korean auto makers Hyundai Motor Co. Ltd. and Kia Motors Corp. already participate in the segment, and General Motors Corp.’s Korean-built Chevy Aveo, new for ’07, is the top-selling subcompact in the U.S.

Sedona’s interior not yet Odyssey level.’06 Kia Sedona long-wheelbase model.Jack Collins retiring.

“The (subcompact) segment is projected to grow more than 58% by the end of the decade,” Vicki Poponi, senior manager-product planning, says at a Fit preview here. “Some estimates are even larger, and most analysts are projecting growth in this segment over the next 10 years.”

And, as Honda’s Civic compact car has grown in size, appointments and price, the Fit will fill a niche that starts just under $14,000.

But, Honda being Honda, the vehicle will have quite a bit more content than its competitors, offering a 5-speed automatic transmission with paddle shifters, similar to those found on pricey luxury models; high-grade interior materials; power windows and door locks and a passenger compartment that can be configured in four different seating schemes.

“Fit has a number of advantages over other subcompact models that provide added value to our customers, allowing it to stand out as a premium entry-level car,” Poponi says.

Honda will release ’07 Fit pricing closer to the vehicle’s mid-April on-sale date. It expects the car to begin between $13,000 and $14,000, higher than its Hyundai, Kia and Toyota competitors.(See related story: Toyota Prices Yaris, FJ Cruiser)

As Dan Bonawitz, vice president-auto operations, told Ward’s last year, the Fit will be aimed at young, first-time car buyers as well as empty nesters looking for affordable, reliable transportation. (See related story: Honda’s U.S. Goal for Fit 50,000 Units)

For buyers 18-25 years old, Honda is expecting sales to be split evenly along gender lines, with incomes averaging $25,000-$35,000 annually. Honda expects older buyers to be in their late 40s to upper 50s, but divulges no further data.

The car will be available in two trims: the Fit and Fit Sport.

Buyers can choose from two transmissions, a 5-speed manual or the 5-speed automatic (paddle shifters are available only on Fit Sport). Honda expects 65% of buyers to opt for the automatic gearbox.

Both trims have the same engine, a 1.5L SOHC VTEC 4-cyl. making 109 hp and 105 lb.-ft. (142 Nm) of torque, as well as six airbags; air conditioning; and body-colored headlights.

Also standard is the “Dive-Down Magic Seat,” wherein the 60/40 second row folds flat without having to remove the headrest – a feat accomplished by moving the fuel tank under the front seat. This configuration is called “Utility Mode.”

The other three seating modes are Tall, Refresh and Long.

In Tall Mode, rear seat bottom cushions are flipped up, creating a rear cargo space 50 ins. (127 cm) in height from floor to ceiling.

In Refresh Mode, the front seat slides all the way forward and, by removing the headrest and fully reclining the seat, the front back seat cushion meets up with the second row bottom cushion to create a flat surface for relaxation.

In Long Mode, the front passenger seat is reclined back and the rear seat folded forward to create cargo space for long items, such as a surfboard.

The Fit Sport trim builds on the base model by adding the paddle shifters to the optional automatic transmission, an underbody kit, rear roofline spoiler and larger (15-in. vs. 14-in.) wheels.

A premium 200-watt audio system with six speakers also is standard on the Fit Sport.

Honda says the Fit Sport’s content is valued at $2,400, but it will be priced just $1,400 higher than the base model.

For this reason, it expects the Fit Sport to account for 60% of sales.

Options will include various dealer accessories, such as 16-in. alloy wheels, a sport muffler with chrome exhaust finisher and a sport grille.

Honda expects to sell 33,000 Fits in the U.S. this year and 50,000 in 2007, the vehicle’s first full year of availability.

The Fit has not been redesigned since its debut in 2001 in Japan. An American Honda spokesman says if the vehicle were redesigned for global markets, it is likely the U.S. version would be too.

For now, all Fits sold in the U.S. will come from Japan, but Honda has said if demand accelerates in North America, it will consider moving production here.