Honda Executive Sees 3% Rise in U.S. Sales in 2007

2007 Honda Fit

Honda Motor  is on track for a 3 percent increase in U.S. sales in 2007, an executive said Friday, but he also called on the Federal Reserve to cut interest rates to boost consumer confidence.

John Mendel, senior vice president of U.S. auto operations at Honda , told reporters the Japanese automaker would benefit from new products such as the upcoming Accord sedan despite concerns about the housing market and the subprime mortgage crisis.

Still, Mendel said he agreed with experts calling on the Fed to cut interest rates.

"In light of the current monetary situation, the policy needs to mirror where we want to go," Mendel said ahead of an event that would introduce the press to Acura's full line of products.

"If cutting the rates is what needs to be done ... for a soft landing, not just for the (auto) industry but for consumer confidence, then the Fed needs to do what it needs to do," he said.

Mike Jackson, chief executive of the largest U.S. dealership chain, AutoNation earlier this week said the U.S. economy was in danger of slipping into a recession unless the Fed moved aggressively to cut interest rates. He also said the pressure on the economy was hurting auto sales.

Luxury Weakens

Mendel said sales of luxury vehicles in the U.S. market -- Honda's largest -- had softened in August, citing the meltdown in the subprime mortgage market.

"The initial dealer pulse from across the industry ... is that luxury is a little bit soft," Mendel said, referring to Acura's August sales.

"If I yell fire, even though it's not my house, I already smell smoke. I think people tend to tuck in a little bit and wait and see."

Mendel also said he expects U.S. industrywide sales of about 16 million vehicles in 2007. Acura's product planning manager, John Watts, said Honda's official estimate is 16.3 million units.

Honda's U.S. sales fell 3.2 percent in July, but were up about 1 percent year for the year through July.

When asked if Honda would be interested in buying Ford Motor's Jaguar and Volvo luxury brands, which Ford has said it might sell, Mendel said Honda would continue to grow organically and is not interested in buying other brands.

The industry has many "undigested acquisitions and that's not where we want to go," Mendel said.

He said Honda is now focused on separating its Honda and Acura brands in design, technology and engineering. Current Acura models share designs with Honda models.

"I think you will see a very different Acura in the next three to four years," he said, declining to add further details.