American Honda Motor Co. Inc. was denied permission earlier this month to open a dealership in suburban Philadelphia, eight miles from a competitor.
Honda had planned to open a dealership in Berwyn, Pa., about eight miles from Main Line Honda, a dealership in Ardmore, Pa. But Main Line's owner, Scott Lust-garten, protested to Pennsylvania's Board of Vehicle Manufacturers, Dealers and Salespersons, contending a new store would eat into his sales. Lustgarten said a shortage of new vehicles, especially the hot-selling Honda Odyssey minivan, forced him to turn away 15 to 20 customers each month.
In denying Honda's application, the board agreed with Lustgarten, saying that any sales generated by the proposed new dealership would come from Main Line or other area Honda dealerships.
Honda planned to open the dealership in the area after studying the region's growth potential, Honda spokeswoman Jennifer Garber said. She also said Odyssey production will be increasing.
Honda is considering an appeal, Garber said, noting that manufacturers rarely are rebuffed when they want to open a dealership.
Lustgarten said a dealership just eight miles away would erode his profits by 75 percent, he said.
The board also cited Honda's high penetration rate in the area within 10 miles of Main Line as a reason to prevent the automaker from opening another dealership.
The term 'penetration rate' refers to Honda's portion of the sales of all competing vehicles. In 1998, Honda had a 13.6 percent penetration in that region, a rate the board said indicates little room for the increased competition another dealership would offer.