American Honda will reduce dealership profit margins on new vehicles and make other changes designed to help support the company's costly transition to electric vehicles, according to a corporate memo obtained by sibling publication Automotive News.
"We don't think the change is appropriate," the dealer said,"but it's also not necessarily surprising." While U.S. dealers will see less money and the margin cut could hurt smaller dealers in particular, these are more moderate changes compared with drastic margin cutbacks expected with Honda's Canadian dealerships.
Jessica Fini, a spokesperson for American Honda, declined to comment on the memo because the company"doesn't share details" of its business relationship with dealers. She said, however, the plans are meant to provide for long-term stability of Honda and its dealerships with the advance of EVs. On the other hand, Honda's March 1 memo outlines a now-fixed dealer marketing allowance of $150 per vehicle for all models effective May 1, which Honda said is near the current average. The dealer said the new policy is neither an increase nor decrease, but reflects average vehicle cost extended to a flat, fixed number.Honda is reducing funding that goes to its Dealer Advertising Association from one per cent of dealer net to 0.5 per cent, also as of May 1.
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