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Honda’s plans for growth

Preferred dealer partners have an opportunity to raise their representation with Honda as the carmaker looks to reduce the number of owners operating its 200 dealerships.

The network has seen around 30 dealerships change hands over the past 18 months, reducing the number of owners to 102. That will fall below 100 by the end of the year and Honda’s target is to have between 50-60 within the next three to four years.

“This gives our dealers economies of scale, which increases their margins,” says Ken Keir, Honda UK managing director.

“We are managing the process and are in dialogue with dealers. They know our plans for growth and some don’t want to do that, particularly some of the ones that have been with us since the start and do not have succession plans.”

First option goes to neighbouring dealers. “It tends to be an amicable parting of the ways. No threats are made, we see it as an evolution of the network,” adds Keir.

Honda’s plans for growth include increasing its penetration in the corporate market on the back of the launch of models it believes are better suited to user-choosers.

The carmaker currently sells 30% of its volume into the fleet sector, but with new Civic aimed at that market, says the goal is to raise that to 35% over the next 12-18 months, and on to 40% in the longer term.

The retail network is performing above the national average on the back of new car sales up 8%. Average return on sales is around 1.5%, although for the core network – dealers with the franchise for at least 18 months – the figure is slightly higher at 2%. The top performers are achieving more than 5% return.

Keir puts their success down to low fixed overheads on premises and high customer service standards, which leads to good retention levels for repeat sales and aftersales business. He says the key focus over the next year will be the launch of Civic, growth in the four to six-year-old repair market on the back of Honda Happiness, launched earlier this year, and strengthening the used car business. New car sales next year are forecast to rise 5%.



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