Honda to Detroit: Take That!

How do you know your ride is hot? When it's not only the most popular car on the road, but also the favorite boost among thieves. That's the case with the Honda Civic. In 2007, Americans bought 331,000 of them, and stole 51,000—more than any other model. This year, Civic sales are up 16 percent, and in May, the 36-mpg car supplanted Ford's hulking F-series pickup truck as America's favorite ride. In this summer of Detroit's discontent, the Civic has become Honda's engine. With GM losing $15.5 billion in the second quarter and even Toyota slashing pickup and SUV production, Honda is in high gear, reporting record profits and sales up 3 percent this year, while overall U.S. auto sales are down by 11 percent.

Fueling Honda's joyride is the same $4-a-gallon gas that's sent other major automakers skidding. Since its humble beginnings during the oil embargoes of the 1970s, Honda has been all about the mileage. Even during the SUV boom and the $1-a-gallon era of the 1990s, Honda stuck to its guns and refused to build anything with a V-8 engine. When Detroit was minting money on Hummers and Explorers, the automotive establishment ridiculed Honda's gas sippers. "They said that we didn't understand the market," says Honda executive VP Dick Colliver. "They didn't think I was too smart; it didn't bother me."

Now it's like "That '70s Show" all over again. Honda dealers are putting buyers on waiting lists, and the company is building a Civic factory in Indiana to keep up. Gas prices drove Moravia, N.Y., farmer Herrick Kimball to ditch his pickup for a Honda Accord, which he uses to haul chicken feed from a trailer hitched to the bumper. "I can load an Accord up like a pickup truck," he says.

Next April, Honda will release a small hybrid priced around $20,000 that it says will get better mileage than a Prius. That should attract even more fuel-conscious consumers, but analysts wonder if Honda, which derives most of its sales from the U.S. and Japan, has deep-enough pockets to develop the high-tech electric cars of tomorrow. "Honda lacks the global scale of other automakers," says veteran auto analyst Dave Cole. For now, though, Honda is giving new meaning to "hot car"—just ask Ohio dealer Don Smith. He sent a woman on a test drive, and she never came back. "A Honda is not easy to steal without the keys," he says. "And we gave her the keys." In this panic at the pump, those are the keys drivers covet.