Honda Motor Co

Honda Makes a U-Turn To Catch U.S. Truck, Suv Trend

Honda Motor Co (T:7267) is redesigning the looks and the marketing for its sport utility vehicles and trucks to appeal to U.S. consumers who are paying premiums for rival automakers’ vehicles that offer a more rugged, off-road adventure image.

Since the 1970s, Honda has been synonymous in the United States with understated, well-engineered and highly efficient cars such as the Honda Civic and Accord. Honda’s SUVs, minivans and its Ridgeline pickup truck are built on the smooth-handling chassis of those sedans.

But over the past five years, U.S. consumers have shifted toward larger vehicles with all-wheel drive, beefed-up suspensions, big grilles and body armor designed for plowing over desert paths and mountain trails – though most such vehicles never leave pavement.

Ford Motor Co ‘s (N:F) new Bronco sport utility and its F-150 Raptor model are chasing this trend. Fiat Chrysler Automobiles NV (MI:FCHA) is expanding its Jeep brand to harvest more profit from a segment it dominates.

More than 70% of vehicles sold in the United States last year were midsize trucks and SUVs, while 53% of Honda sold fit those categories. Honda does not sell a large pickup that competes with the Ford F-150, and is therefore shut out of one of the U.S. market’s most profitable segments.

Honda is hoping the new approach will boost Ridgeline sales to 50,000 trucks a year from about 33,000 in 2019. The automaker has forecast a 68% decline in global operating profit for the current fiscal year that ends March 31, mainly due to the sales lost to the pandemic.

On the technical front, Honda share RSI is at 48.20% and suggests that the market can move in the upward direction. The current price is trading above 20 day MA, & around 5 day MA and below the50 day moving average. The stochastic is forming a parallel side crossover.

Overall Bias is positive and Short-term buy trades can be initiated with below mentioned Stop Loss and Profit targets.

Trade Suggestion–BUY HONDA ShareAt 2580.00Take Profit At 2592.00  Stop Loss At 2565.00