Is this a trademark violation?

Seems wrong, imagine it would be. Have you looked into adwords’ terms and conditions?

well adwords doesnt seem to have an opinion. they can’t possibly keep track of the world’s trademarks. besides, i dont use the trademark anywhere in a visible sense. My ad just shows up in the sponsored section, and the ad doesnt use the trademark. The search results too, are not affected by my using the adwords program.
so in the toyota/honda sense, if i am a car enthusiast that believes in honda more than toyota, are you saying I can’t put up an ad saying, ‘here is an option: honda”?

I dont think so, Honda is only making a reference to a competitor’s brand, and nothing else. It is not diminishing the brand name by doing so, even if it was critical of it.

If Honda called their next car the Toyota, then that would be a problem.

Can’t pull up a reference right now, but no, that’s not a trademark violation. And yes, companies do indeed do that with Google (that is, purchase AdWords of competitor’s names/products to ensure that their own items will be listed first in the sponsored results.)

In short, Honda is not representing itself as “Toyota”. We’re just talking about the ordering of search results here.

Ah… here ya go… Judge clarifies Google AdWords ruling in the US:

The upshot: Google’s sale of GEICO trade marks as keywords was not unlawful. But GEICO established a likelihood of confusion with regard to those sponsored links that use GEICO’s trade marks in their headings or text. So the sale of GEICO as a keyword was lawful; but ads that included GEICO’s marks in their text, however triggered, were not. If the keyword GEICO triggered an ad without GEICO’s marks in its text, there would be no infringement.