Honda Division sales were up 4.8 percent in 2005, making the marque the fourth-best selling brand in this country. Trucks accounted for the increase. Even with a redesigned Civic and a freshened Accord, Honda car sales were down.
Honda dealers will get a boost in the car line this year. The long-awaited subcompact Fit goes on sale this spring. On the truck side, dealers will get a redesigned CR-V, the entry-level SUV.
Although Honda remains a strong brand, dealer profitability has been slipping, and there is not enough service capacity to handle its increasing number of customers. In addition, Honda remains the only brand among the top six without a full-sized pickup or a V-8 engine.
Honda National Dealer Advisory Board Chairman Mario Murgado talked about these and other issues with Staff Reporter Kathy Jackson.
Are the dealers enthusiastic about Honda products?
Dealers are optimistic right now, particularly with the new Civic. It has matured well.
There is no product in that segment that can compete with the Civic. It had a bold look, and there is also performance with the Si model.
Honda had lost a lot of its oomph, particularly among younger buyers. How important is the Si to bring excitement back?
It will be our halo car. It will bring in the youth. It is a car that has passion, and we need that.
I don't think we really lost our passion, but it is always hard when you are at the top of the game.
Honda has always had great cars with great value. Now the Si will help us even more.
And the subcompact Fit is finally coming.
That was a big concern. We were not represented in that segment. We really need to be there.
What other products are coming up?
We will get a new CR-V this year. It will be a major redesign.
The current CR-V is phenomenal, but I'd like to see the new vehicle appeal to men as well as women. We now sell more to females.
The new one needs to be bigger, wider and longer and have beefed-up wheels.
There doesn't seem to be anything that is really hot, like some of the halo products the competitors have.
The Honda dealers are happy with the product lineup.
Our national days' supply is low.
The (2006) Accord has one of the best mid-cycle changes we have seen.
The Odyssey is incredible. Nothing comes close.
What about the Ridgeline truck?
Those sales numbers don't look so good.
We have had good success with the Ridgeline at our dealerships. The company didn't miss a spot on design, features, etc. But we do need more awareness of the product. It takes time to build a new product. You will start to see sales increases.
Honda's biggest engine is a V-6. Do dealers want a V-8?
It's a unique opportunity for us in the United States. Some people are shying away from V-8s now because of the gas, but Americans have always enjoyed V-8s. I think it will be a natural progression at Acura and then for us.
Do you think Honda is seriously thinking about building a V-8 for the United States?
I think it is something that Honda is seriously analyzing. I think we will get it. Honda is competitive.
On which Honda vehicles will we likely see a V-8?
I think it would first have to be on the pickup truck and the SUVs.
Have you had situations where a customer did not buy a Honda because it was not equipped with a V-8?
I have not experienced that, but I think if Honda were to have a V-8, it would expose us to new customers.
The Ridgeline was our first entry in the pickup segment, and it far outperforms vehicles that have V-8s. But in the truck industry, you must have a V-8. That could happen with the second generation of Ridgeline.
Honda is receptive to ideas from its dealers and customers. They did give us Ridgeline.
What are some of the big challenges for Honda dealers this year?
To have enough land for bigger facilities. We need more space for service and parts facilities to better service the customers. Over the next few years, Honda is looking to grow its sales from the current 1.2 million to 1.5 million, so we need facilities to park cars, service more vehicles, etc.
What are some of the other concerns?
To continue to make sure that Honda has a good pulse on what the dealers and customers need. That we have no glaring holes in the product line.
Will Honda get into customer rebates?
Honda is a very cautious company. They will study things until they are comfortable. In this environment now, most companies are offering rebates, so Honda has to look at everything.
If every company is offering rebates, there may be times when we may be forced to do it.
But Honda will look at other ways to offer incentives, such as leases.
Are dealers happy with Honda incentives?
I would say yes. Honda is very competitive. We price the right way so you don't have to offer a lot of incentives.
How is dealer profitability?
It dipped in 2004.
It has improved. Profitability is an area where we want to do better. The new Odyssey has helped. The Civic, Accord and Ridgeline are helping, too.
Honda came out with the first hybrid car, yet Toyota gets all of the attention with its Prius. Do you think Honda missed the boat there?
Honda is not a car company to toot its own horn. It's still learning more about the hybrid customer. The Honda Insight still is the most gas-efficient car out there.
Toyota has done a good job of marketing its hybrids.
Is there an area where Honda could promote itself better?
Virtually every product we sell has a five-star safety rating. Only the S2000 sports car is a four-star. No other company does that.
I think we should promote that better because the consumer is very safety-oriented.
What about Honda versus Toyota in this country? Why is Toyota so much bigger than Honda here?
Dealers are very competitive, so I'd be lying if I said we do not want to be No. 1. Could that be done?
Honda has never said it wants to be No. 1. These are two very different companies, both great.
We're both very competitive. If there is one segment we're not in, we will get there. For example, the full-sized truck segment.
That's why we need to be successful with the Ridgeline. Then maybe Honda will give us a full-sized pickup.
Are the dealers satisfied with Honda advertising?
The dealers meet with Honda regularly on both Tier 1 and Tier 2 advertising. We're now looking at more breakthrough advertising like with the new Civic. The look and feel is more aggressive. That's what we want to do.