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Honda tells some dealers to upgrade, or else...
In March of this year, Honda sent a letter to certain members of its dealer network letting them know they needed to make changes to their stores. With so many Hondas leaving showroom floors, dealers are doing all right on the sales side, but some aren't performing to Honda's standards on the maintenance side, with waits of up to three weeks to get your Honda serviced. And maintenance wasn't the only issue Honda chose to address with particular outlets. The changes Honda asked dealers to make include increasing or improving a building's site size, showroom area, service department area, and number of parking spaces, among other things. They are the kinds of changes certain to make customers happy.
Dealers, though, are none too pleased. One dealer said Honda's asking him to invest more than $2 million, and his market doesn't support that. Another dealer, also facing a $2-million-plus bill for requested changes, said the increased debt load would decrease the value of his business should he sell. Honda, of course, doesn't think it is asking too much. Dealers feel that Honda is threatening not to renew their franchise agreements if the changes aren't made, but Honda says it doesn't really have that power. Nevertheless, dealers have been told they have until May 31 to lay out their improvement plans, and until January 2010 to break ground.
[Source: Automotive News - sub req'd]
Reader Comments (Page 1 of 2)
andybee 5:50PM (5/05/2008)
this happened in the UK a couple ofyears ago. Quite a few dealers who had been with SEAT since the beginning lost the franchise and many ended up closing down. Many of the good true 'local' dealers were lost.
I've also often wondered why US Honda dealers have blue white branding. Whats that about - why dont they have red and white like Honda, the world over.
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jordan 5:57PM (5/05/2008)
Honestly, I don't see the problem. They signed their contracts with Honda with this possibility in mind, but it was worth it at the time, for them, to make the investment. I understand that not all markets are going to be able to afford said upgrade, but if they can't then Honda will really have to decide whether it makes good business sense to close said dealership. Most likely, Honda won't do anything, because it would make too much common sense to have them close down the dealers with 3-week wait times.
At minimum, I would hope that *all* dealers that had bad service areas would be required to make the necessary upgrades to improve service, because that reflects Honda's image much more-so than their lot size. "If your store has a 1+ week lead time for service, and you have no plans to improve that, we're gonna shut you down." Again, unfortunately, they probably won't even do that. I've lived in all different kinds of cities, and I've yet to really see a dealership be shut down by their parent.
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R 8:11PM (5/05/2008)
I agree, unless I'm missing something, this doesn't seem any different than any other franchise agreement. The local Subway got pressed heavily by corporate to up their decor standards to the rest of the Subways, and they complied, eventually.
Torrent 5:56PM (5/05/2008)
...
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mk 11:13PM (5/05/2008)
Sounds like Honda needs to get over itself.
One wonders, for the sort of money that Honda is making them spend, could they convert to another brand that isn't making unsubsidized requests, or demands.
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Toy Yoda 6:01PM (5/05/2008)
I wonder if BMW ever does something like this? I live in New England and my choices are dwindling. Herb Chambers really sucks.
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Barry 10:42AM (5/06/2008)
Bad news: BMWNA is notoriously hands-off with their dealer network and rarely intervenes to correct bad apples. My local BMW dealership is a substandard outfit owned by Group 1 Automotive. BMWNA has expressed exactly zero interest in encouraging them to act like a premium dealer.
Here's a horror story for ya. The dude got very little help from BMWNA with a clearly negligent dealer:
http://www.bimmerfest.com/forums/showthread.php?t=49291&highlight=savage+bmw+m3
Tool 6:27PM (5/05/2008)
Honda (and Toyota) dealers practically print money with their operations. Every single dealer is a multi-, multi-, multi-, multi-, multi-, multi-millionaire.
So to hear them bitching about investing money in their operations to serve customers better and expand throughput--which will only increase their profitability LT--is a bunch of crap.
Toyota recently backed off of requirements for some dealers to expand, which is a huge mistake, especially since TMS has stated it will not expand its dealer network with a ton of new points.
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mk 11:19PM (5/05/2008)
an urban area dealership may indeed be that way...
but in fly-over country, not all of the dealers are urban, and not all of them turn over that much inventory.
Those are also the ones more likely to have older facilities, fewer service bays, etc...
Most city dealerships are all about the bling anyway, it is the rural dealers who don't have the cash to spend on flash.
havoc 6:59PM (5/05/2008)
a honda dealer that was a client of mine in the past was getting audited frequently by honda, advising that their website and online inventory was not up to honda standards. this included using specific stock photos for cars decoded by vin. not to mention that evidently nav packages are part of the vin?
the description and color chit show a gold civic with nav, but this civic is decoded as red with a 5 spd.
DEMERIT
your online used car section does not separate used honda products and display them on another page, or even prior to other used models.
NO SOUP FOR YOU!
etc etc...
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iQuack 7:39PM (5/05/2008)
Good for Honda!
One distinguishing characteristic of Honda is that its dealers look strong. Good locations, bright and clean showrooms and service areas. This builds confidence for Honda owners and prospective owners.
No greater turn-off when car shopping than a lousy showroom and service area which say that neither the company nor the dealer care about how they appear.
I wouldn't buy a car from a slob.
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Dad 8:04PM (5/05/2008)
"Honda sent a letter to certain members of its dealer network letting them know they needed to make changes"
Maybe Honda should fix the faulty 3rd gear problem in their manual trannys and that might reduce the workload?
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Noidor 8:52PM (5/05/2008)
It's not necessarily about quality, but dealer's ability to quickly correct the problem, and be able to recover, maintain, and strengthen the relationship with the customer.
There are many lame ducks dealers out there who do a piss-poor job on every single front. In my mind Honda is doing the right thing, they have to be solid on all fronts, even if that means losing dealers. Which is not bad thing, considering the US new car market is about to get a WHOLE LOT smaller.
Also dealers are lying about Honda not renewing the franchise agreements, franchisor has little power to merely terminate the contract.
Dealers are no better than most Mortgage Loan Officers, a majority of them are deceiving, greedy crooks.
Daniel 10:25PM (5/05/2008)
They did...
dallennium 8:47PM (5/05/2008)
Honda would do better to keep the quality of there product as high as it was in years past. I for one care more about having a quality product with a good transmission, than what the sign looks like out front.
I would even take Honda standing behind there own recall letter.
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sodakar 9:52PM (5/05/2008)
Part of buying an excellent car is to have an excellent dealership to buy it from, and to take it back to for maintenance. Cars aren't as simple as they used to be, and while I can still rebuild an engine, I'd much rather pay the extra few bucks to have it properly maintained before it gets to that point.
As others have mentioned, car dealerships are *not* poor by any stretch of the imagination, and if they spent half a minute thinking about it, they would realize that Apple computer products would not sell as well if customers had to go to Radio Shack to buy them. Yes, the showroom needs to be just as good as the product you're selling...
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tankd0g 10:57PM (5/05/2008)
First of all, Honda's color is red. Fix that sign.
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British_Rover 9:24AM (5/06/2008)
This is perfectly within Honda's rights under their franchise agreements. It is perfectly normally for a manufacturer to demand certain standards be upheld ad the dealership. Land Rover recently pulled the franchise of one dealer in the New England area because they were not meeting certain guidelines and their service department was pathetic.
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Way of the Future 9:27AM (5/06/2008)
i am not into Honda's that much, but I recently visited 2 dealerships with a family member interested in one, and one was well lit and had valet parking and a Flavia machine, nice facilities and everyone was very helpful and another that was dim, and no parking and not very helpful, and they happen to be the only dealer in the area.
the 1st dealership will get the deal, just because its a better buying experience and just feels like a better place to buy a vehicle and take it in. Honda is right in addressing these needs across all their dealers.
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uofujoe 11:28AM (5/06/2008)
$2 million to upgrade? I'll have to talk to my manager, I'll be right back.
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