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Honda finance to pay $24M for discriminatory lending practices

Honda has found itself in hot water in the United States over allegations of discriminatory lending practices. However the Japanese automaker's American subsidiaries are taking actions to not only alter its practices, but compensate the victims of such past discrimination. According to the Consumer Financial Protection Bureau, some Honda dealers were found to have offered less preferential loans to customers of African-American, Hispanic, Asian, and Pacific Islander ethnicities than they have offered to white customers, irrespective of their individual financial situations. The American Honda Finance Corporation has allowed dealers to mark up individual loans by two percent or more, depending on the length of the loan's contract, thereby opening the door for dealers to set interest rates at their discretion. And that discretion, according to the CFPB and the Department of Justice, has been applied in a discriminatory fashion, in violation of the Equal Credit Opportunity Act. Honda, for its part, refutes the allegations and maintains that its practices have not been racially or ethnically discriminatory. The company is nevertheless taking measures to address the charges. For one thing, Honda's US financial arm is reducing the amount of wiggle-room it gives its dealers to only 1.25 percent above the buy rate for short-term loans (5 years or less), and one percent for longer-term loans. It has also set up a $24-million fund to compensate victims of the alleged discrimination, coordinating with the CFPB on the dispersal of said funds. The CFPB reports that "because of Honda's responsible conduct," it is not seeking penalties to be levied against the company for the alleged discrimination. STATEMENT BY AMERICAN HONDA FINANCE CORPORATION RE: Settlement with the Department of Justice and Consumer Financial Protection Bureau Jul 14, 2015 -- American Honda Finance Corporation (AHFC) has reached an agreement with the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) that shows our commitment to work together to be part of the solution and to establish the path forward that best supports our Honda and Acura customers and dealers with clear and convenient financing options. AHFC strongly opposes any form of discrimination, and we expect our dealers to uphold this principle as well. We firmly believe that our lending practices have been fair and transparent.

Junkyard Gem: 2000 Honda Passport 4WD

The suits at American Honda Motor Company must have spent the bulk of the 1990s tearing out their hair in frustration as their rivals raked in big money from the sales of ever-more-profitable SUVs, even as American car shoppers lost interest in sedans and hatchbacks. Oh, sure, the Civic-based CR-V appeared here for the 1997 model year and sold well enough, but the lack of a larger SUV pained Honda more with each passing year. With the Acura MDX and Honda Pilot not ready for showrooms until the 2001 and 2002 model years, respectively, some stopgap had to be found. Isuzu stepped up and made a deal with Honda: the Rodeo would get Honda badges and become the Passport, while the Trooper would show up in Acura showrooms with SLX badges (for the 1994 and 1995 model years, respectively). Here's one of those Passports, found in a Denver-area self-service yard. Things got even weirder in the Isuzu/Honda world around the turn of the century, with the Honda Odyssey getting Isuzu badges and being sold as the Oasis. Fast-forward to 2009, and the only Isuzu-badged vehicles available new here were rebadged Chevrolets: the I-Series pickup (Chevy Colorado) and the Ascender (Chevy Trailblazer). The Passport name has some interesting American Honda history, stretching back to the first Honda vehicle sold here (and the biggest-selling motor vehicle in human history): the Super Cub. American Honda Motor Company couldn't use the Super Cub name on our shores, because Piper Aircraft had been selling a small plane called the Super Cub since 1949, so the motorcycle was called the Honda 50 over here. Eventually, this bike got a 70cc engine and became the Honda C70 Passport, sales of which continued through the middle 1980s. That means the Passports sitting in your local Honda dealership right now got their name from a one-cylinder motorcycle. General Motors has a Passport connection as well; when GM created the Geo brand to sell rebadged Isuzus, Suzukis, and Toyotas in the United States, it created a marque called Passport to sell the Daewoo LeMans as the Optima in Canada (all the other vehicles sold by Passport dealers were Isuzus). So, Honda's need to offer SUVs in its American dealerships led to an arrangement with GM-connected Isuzu to sell these trucks with a model name bearing links to both companies. So much history in the junkyard! Just as Geo-badged Toyota Corollas (mostly) got Delco radios, so did the Passport get Honda radios.

Acura ILX headed for Civic-like early upgrades

The not-yet-ready-for-primetime 2012 Honda Civic saw it quickly returned to sender for refurbishment, now the Acura ILX is headed in the same direction in its very first year. Automotive News reports that the small, Civic-based sedan from Honda's luxury brand isn't meeting sales expectations, with an annualized rate of 22,000 to 24,000 sales instead of the 30,000 the company is after. More telling is that the ILX "is being outsold by the Buick Verano, Volkswagen CC and Audi A4," and, except for two months since it launched, it has also been outdone by the Acura TSX it is meant to replace.
Part of the cause has been the 2.0-liter, four-cylinder engine: its 150 horsepower to motivate a sedan that can weigh up to 2,970 pounds doesn't offer the kind of performance or value experience that buyers in the segment respond to. Another big issue is that the top-level 2.4-liter engine is only offered with a six-speed manual even though most buyers of the highest trim don't really want to shift their own gears. Lastly, the ILX might not put enough space between it and its frugal underpinnings - our first drive review pegged it as "the world's nicest Honda Civic."
An automatic transmission is on the way for the 2.4-liter, but it isn't clear when. And while Honda admits that the 2.0-liter is underpowered and Automotive News says it's on the way out, the company hasn't yet said how that situation will be corrected.