LOS ANGELES -- Honda has built its brand in the United States in part by avoiding the trap of daily rental sales -- usually selling less than 2 percent of its total volume to the fleets.
That's by far the lowest percentage among volume brands, and Honda believes it results in a stronger brand, better residual values and more attention paid to the retail customer. But some dealers say Honda Division, which has lost nearly a full point of market share this year, has relaxed its rules somewhat on fleet sales.
They say Honda is looking the other way at retailers who blow out excess inventory in "fleetail" deals -- units sold by the dealer to local daily rental or small-business fleets, sometimes even to the nearby Enterprise Rent-A-Car outpost.
Honda's fleet percentage has hardly budged in 2010 -- it's about 2.4 percent. But that doesn't count fleetail sales, which Honda doesn't disclose, even to its dealers.
The issue comes to a head when those fleetail units allow a slick dealer to win increased turn-and-earn allocations, stair-step incentives, or bonus prizes such as overseas trips. Normally, those units aren't supposed to count toward the total, but dealers complain that their colleagues aren't reporting the sales properly and aren't being audited by Honda.
According to some dealers, Honda strictly audited dealer sales reports in the past, ferreting out the fleetail units that might push a dealer over the top. But they complain that enforcement has become lax in the climate of continuing economic weakness as all automakers struggle to keep the production lines moving.
"Honda has no manpower to do the manual audits," said Dominick Minotti, general manager of Honda of Morristown (Tenn.). "Say we got 100 dealers in the zone, they'll audit 20. They let dealers do self-audits. I've been with Honda 23 years. Either I do it right or I don't do it at all. But some other guys ... "