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Honda looks at used car centres

Honda UK is to extend its franchised programme to incorporate dedicated used car dealerships under its market area strategy.

The carmaker believes that there are key points around the country where a standalone used car operation with aftersales facility would benefit dealers and help it to better control the flow of corporate cars back to the market.

The idea, similar to Mercedes-Benz’s Direct used car operation, has sprung from the fact that Honda’s latest products are attracting new customers to the network with different part exchange cars.

Honda also recognises that used cars are often a customer’s first point of contact with the brand.

Phil Crossman, Honda UK network development manager, said: “This would be a great way for our dealers to build their used car business.

We will do it in conjunction with dealers as we talk to them about market areas.

There is no blueprint, but if a dealer feels that a used car site would be beneficial, we would look at how we could accommodate it.

“This is a flexible approach and, in a typical Honda way, is slightly different to what others have done.”

Honda is in talks with one dealer looking to join the franchise who is considering a dedicated used car operation and service centre as part of their agreement.

It could happen later this year. Under the market area strategy, Honda is looking to cut its dealer partners to 65 by 2010 with around 200 outlets.

It presently has 99 owners operating 195 outlets – a drop from 107 last year. By the end of 2008, it expects to be in the low 90s.

Its chosen partners will be granted a maximum of two market areas each with no more than eight sites.

Honda is keen to retain a balanced mix of owner driver, regional and plc partners but says the structure has to be appropriate to the local market.

Honda is able to restrict dealership numbers in this way because it has less than 5% market share.

This means it operates ‘de minimis’ under Block Exemption, exempting it from parts of the regulations.

“We have to make sure our partners share Honda’s philosophy, our ambition and our drive,” said Crossman.

“The main driver is the need for our customer experience to be better and stronger.

“Our new products will change our customer base and some facilities don’t match up.

If someone is going to pay £30,000 for a Honda, it has to be in a facility that is commensurate with that.”

Honda has received 32 applications in the past year from dealers eager to join the franchised network.

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