Honda dealers roll into 2004 with lucrative franchises, increased production and new product on the way. For 2003, Honda sales were up 8.9 percent, the highest percentage increase among the top five brand sellers in the United States. And Honda, the No. 5 seller of vehicles in the United States, soon may supplant Dodge as No. 4.
Michael Zimbrick, chairman of the Honda National Dealer Advisory Board, is excited about 2004 for several reasons: The company has announced increased production of the Pilot SUV and Odyssey minvan; Honda soon will enter the pickup market, and nearly 100 percent of Honda dealers are profitable.
But there are some worrisome issues:
Zimbrick talked with Staff Reporter Kathy Jackson.
How would you sum up the past year for the Honda franchise?
The industry was down a little, but Honda was up 8.9 percent (for 2003).
What is the hot product for Honda?
The Odyssey and Pilot. When we get the new '05 Odyssey, we'll be first in class in the minivan segment again.
What is your weak link?
The Civic. We have two years left on the current model, and that segment is becoming more competitive. We need marketing and innovative ways to move that car.
Has Honda been too slow getting into the pickup market?
Honda had no entries in the truck market for a long time, but this year about 46 percent of our business is trucks, so we have responded pretty quickly to that area. I think our dealers will be happy with how we're getting into the pickup market.
We don't have a V-8, so we need to look at macro trends for our pickup - something like a mini hauler, a four-seater that is a sport-utility truck vs. a pickup truck. That might be more helpful to our customers.
I think we need to look at the submarket, a different demographic, because the hard-core pickup owners are most resistant to change. Toyota has seen that, and I think Nissan will soon find that out.
Any segments in which Honda is lagging?
We'd like to see an entry-level car under the Civic, in the $10,000 to $13,000 range. Though that's not a highly profitable car, we need something to capture the youth market because brand intention is solidified early in life.
What new products are on the way?
I can't talk about the specific products, but where we're headed directionally is with hybrids, standardized safety features and telematics.
Will you get a V-8?
Honda is a green company. The V-8 may go against that. So we may be able to come up with two extra cylinders vs. a V-8.
What is the role of the dealer council?
Our council plays a good strong role with the manufacturer. We don't always agree, but they do listen to us. Because Honda is a fairly flat organization, we can call up the decision makers and get an answer.
What I want to do is bring the manufacturer and dealers even closer together so that we're working on the same goals earlier. That has not happened in the past. In the past, it has been reactive, not proactive, so we need to get to that point.
Some people within the company look at the dealers as a necessary evil, but some think it's a true partnership. I'm trying to get rid of the necessary evil and get to a true partnership on both sides.
What are the top priorities for the council in 2004?
The No. 1 priority throughout the whole company is quality. We are now selling over 1 million units, and there are more and more quality problems. In essence, I think there are less when you look at the volume, but the perception of the dealers is that there are more.
We also need to come up with the right measurements for measuring things like SSI. One of the problems is that we have too many points in some areas that don't need them. The goal was to put in as many dealers as possible to be competitive, but that's a 1970s distribution system. That pits the customer among competing dealers. Lexus and Saturn dealers are not competing with each other. That's why they're high in SSI. We may need to get into more expanded areas. So that may mean not putting in a new person in an area when a point opens up. We need to learn how to measure SSI. That has gotten away from us. We are in the middle of the pack in SSI.
What about CSI?
I don't think the factory will ever be satisfied with CSI until we have a fault-free car. Well, that's the manufacturer's job. So in the meantime, we need to come up with trouble-free service.
For example, do we have enough stalls to satisfy the customers? Maintenance and light service will be something we have to focus on. We need more convenient places to serve the customer and some sort of express service.
What is the council's feeling on advertising mandates from the factory?
There is a lot of controversy surrounding that, but what's good for the Honda brand is good for the dealers over all. Advertising "blowouts" do hurt the brand. There are some dealers who don't like those mandates, but because we don't advertise as a cheap brand, our brands hold value.
What is the main strength of Honda?
What is the weakness?
We need a better way of measuring SSI and CSI without having polluted data. We need larger service areas and adjacent market rules.