Honda’s hybrid Insight launched in March as a lower-priced competitor to the Toyota Prius, but slow sales are already causing Honda to question its sales forecast for the car.
Low fuel prices, the economic recession and competition from the Toyota Prius, which has more name recognition than the Insight, were all cited as reason’s for disappointing sales. The Insight is less expensive than the Prius, but also, which could also hurt its sales in America, where customers traditionally opt for larger vehicles whenever possible.
Honda originally expected the Insight to sell 90,000 units in the first year. In an interview with Bloomberg, John Mendel, Honda’s U.S. executive vice president, said that it looks like the Insight’s first year sales will be between 50,000 and 60,000 units. That would mean the Insight would miss its initial sales goal by about 33%.
If sales don’t pick up, Honda could be forced to add incentives or lower prices to make the Insight more attractive to buyers. Toyota has already added a low-cost Prius model with fewer amenities in order to compete with the Insight’s price, so an even lower priced Insight could convince frugal-minded buyers to pick the Insight over the Prius. Honda is currently offering 2.9% APR car loans for many of its models, but not the Insight.
The Insight is popular in Japan, where fuel prices are about 78% higher than in the U.S. (well over $4 a gallon), according to Bloomberg. The Insight was the #1 selling car in Japan during April, but was outsold by the Prius in May.
If the Honda Insight fails to meet its sales goals, Honda and other companies may be forced to rethink their aggressive hybrid and electric car strategies for the U.S. This could slow down the arrival of the planned Fit Hybrid as well as curb investor enthusiasm toward electric vehicles, slowing down their arrival in the United States.
The Honda Insight isn’t selling as well as Honda initially planned.