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When Honda's 2012 Civic debuted at the New York motor show in April, critics unanimously slammed its cheap, hard-plastic interior .

It was a discouraging result for a car that accounts for one in five of the more than three million vehicles Honda sells annually and that was supposed to be the answer to Hyundai's Elantra in the increasingly competitive small-car segment.

Tokyo-based industry analyst Tatsuo Yoshida said: “When I saw the interior, it worried me. Sure, the fuel economy was impressive - but the Korean brands are raising the game with big improvements to their cars' interior and they're becoming an increasingly attractive option for people buying a new car for the first time.”

It got worse this week when influential market watchdog Consumer Reports rated the new Civic 11th out of 12 small sedans on the US market.

The authoritative report blasted not only the Civic's interior but also its steering, brakes, cornering and “annoying” road noise.

Some believe that points to deeper problems at Japan's No.3 automaker, that Honda cars are becoming mediocre, threatening the reputation of a brand's built on smart engineering and innovation.

Industry analyst Bill Visnic said: “Honda built its reputation on engineering excellence; now they’re becoming a very ordinary car company.”

It remans to be seen how well the Civic will do in the marketplace the March 11 earthquake in Japan has cut supplies. Civic sales in the US are down 10 percent so far this year - but if that doesn’t pick once supply constraints disappear later this year, it could threaten sales projections at a time when analysts say stiffer competition is one of Honda’s biggest problems.

David Champion of Consumer Reports' test centre said: “We've always really liked the Civic. It's always been a favourite until recently. But when you look at Honda for the past, maybe, three years, they haven't exactly been great.”

Keeping American customers happy is crucial because the US is Honda's most important market, accounting for a third of its sales and even more of its profits.

As of 2010 Honda's market share was still an enviable 10.7 percent, making it the country's No.4 automaker. Three of its model - the Civic, Accord and CR-V - are either the first or second in their segments.

Even the Civic’s market share has risen 2.7 percent over the past four years, while Elantra's sales have replaced those of General Motors' discontinued Pontiac and Saturn brands.

Consultancy JD Power said Honda's historical popularity was due to its consistently high ranking in initial quality studies, because durability and reliability were still the most important factors in choosing a new car.

In this 2011 JD Power ratings, released in June, Honda was top among mass-market brands, while Hyundai fell below the industry average - but Hyundai was rated the most improved brand.

Director of automotive research Raffi Festekjian said: “It's great news for Hyundai.

“Reliability is important. But you know what? You still need to make a vehicle that is appealing, fund to drive, and comfortable to sit in.”

And say critics and customers alike, is wear the Civic falls down.

One reader wrote about the Civic on Consumer Reports' website: “The styling leaves much to be desired, and looks bland and generic next to styling leaders such as the Elantra.

“As a long-time Honda owner, I am really sad that Honda seems to have done nothing noteworthy for several years now.”

Consumer Reports itself spared few punches.

“The problems that really hurt the Civic's score run deeper and they showed up at our test track. Stopping distances are long. The steering is lightly weighted and comes up short on feedback. Body lean appears early in the corners. The ride is marred by frequent short pitches. And road noise still remains an annoying companion.”

Honda's top engineer, Yoshiharu Yamamoto, defended the Civic, including its interior, but conceded it could be better.

He said: “In the past, the US Big Three lost out to us and their position in the market diminished.”

“We're going to be in that same position with the Koreans if we're not careful.”

But it’s not too late for Honda. The next Accord, due in the third quarter of 2012, will have a new generation of engines and transmissions and Honda will also have the benefit of lessons learned from the Civic.

Yoshida said: “If they can achieve the same perceived quality and luxuriousness as Hyundai, I think they can win because they've still got the stronger brand.

“But they also have to bring in new customers, or they risk going the way of Buick and Oldsmobile, which ended up with only older customers who were loyal to the brands' past glory.” - Reuters