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New Honda chief lowers 2003 target, but adds dealers in bid to double sales in five years

Offenbach. Hideo Tanaka, who in April became president of Honda Motor Europe North, plans to sell "more than 35,000 cars" in 2003. In March, his predecessor, Hiroshi Kobayashi, announced a sales target of 38,000 units.

"Nonetheless we will improve our result by at least 8 percent, despite a weak market," Tanaka said.

In the long term, Honda plans a high growth strategy in Germany.

"In five years time we will have more than doubled our sales to approximately 72,000 units. Average sales will then be approximately 220 vehicles per dealer," Tanaka said. In 2002 Honda had 32,600 new registrations, an average of 110 automobiles per dealer.

The importer's sales network consists of 265 dealers with a total of 337 locations. By the end of 2003 another 25 locations will open in areas such as Bonn, Bochum, Duesseldorf and Recklinghausen. In 2004 a further 19 dealers will join.

"That way we will totally cover 290 important German areas with more than 360 locations," Tanaka said.

High dealer margins, which can reach a maximum of 21.75 percent, are the main attraction to new partners, Tanaka said. Such a high margin can consist of: basic margin 14 percent, growth discount of up to 1.75 percent, volume discount from 0.5 percent to 4 percent, structural discount 1 percent and grant towards advertising costs 1 percent.

The average yield for Honda dealers is approximately 1.6 percent, compared with the national average of only 0.2 percent. In addition, Honda dealers can supplement their income through sales of Honda motor bikes. There are already 70 "hybrid dealers."

A diesel offensive will also encourage growth. Honda's first compression ignition engine, which was developed in-house, will launch in January in the Accord. It's a 2.2 liter light alloy engine with 140hp. Honda hopes to sell 1,500 sedans fitted with the engine in 2004 at a basic price of 26,360 euros. Of the Caravan version Tourer the sales target is 2,500 units, priced from 27,660 euros. This would correspond with 40 percent of total planned Accord sales.

At the beginning of 2005 the updated version of the Honda CRV will also be fitted with the new diesel engine and a particulate filter engineered by Honda.

In 2006 another Honda diesel engine will launch in the new Civic.

There are no plans to fit the top selling Honda Jazz with a diesel engine. However, from 2005 it may be available with a hybrid engine called Integrated Motor Assist (IMA). The same aggregate will be used in the Civic from November - Honda hopes to sell 1,000 units of the model in Germany in 2004. The company expects worldwide sales of the hybrid model of 25,000 vehicles.

"This will be a fantastic competitive advantage," Tanaka said.

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