DETROIT — Honda is having trouble shrinking its inventories, even after cutting North American production. But relaxed financing terms and dealer cash incentives that took effect this month may help.
The goal is to cut Honda brand dealership stocks during the next 90 days, said Dick Colliver, executive vice president of American Honda Motor Co.
"Today it is a little over 100 days supply," he said. "Our target is to get it down to 65 to 70 days."
Colliver said managing inventories at a time of huge swings in consumer preferences is difficult.
"We probably have two to three meetings a day looking at production and inventories," he said. "How do we make adjustments and balance the right model mix at the same time?"
Since Jan. 6, Honda has given dealers $500 to $3,500 on most trim levels of all vehicles except the Fit and S2000, according to Edmunds.com. The program ends Feb. 2. The incentive covers 2008 and 2009 models except for Civic and Pilot, which are only for 2009.
Dealers say the cash gives them more flexibility than the program it replaced — 2.9 percent financing offered on most Honda models.
"Dealer cash really works for us," says Jim Canty, general manager of Airport Marina Honda in Los Angeles. "Our customers didn't qualify for the super preferred financing rate."
Looser financing terms also may help. Honda Financial Services is financing new-car customers with credit scores as low as 620, down from 650 in December, said Chad Jennings, finance director at Joe Marina Honda in Tulsa, Okla.
"That's going to help reduce our inventories as much as anything," he said.
Honda sales were down only 6.4 percent last year, in a market that dropped 18.0 percent. But the brand's sales plunged 34 percent last month.
In December, Honda said it would cut 119,000 units from North American production through March 31.