American Honda Motor Co. wants its dealers’ sales this month to top December 2012 levels, and is offering cash to make sure that happens.
The automaker is running an aggressive incentive program that will pay its U.S. dealers $3,000 for every vehicle they sell above their December 2012 sales total. The program runs Dec. 3 to Jan. 2, a company spokeswoman said, confirming a bulletin sent to dealers earlier this week and reported earlier today by The Wall Street Journal.
“As the year comes to a close, we are looking to our dealers to ‘best themselves’ and push beyond what they did last December,” John Mendel, executive vice president of sales for American Honda, said in a text response to a query.
The incentive does not apply to Acura-brand vehicles.
Dealers do not get the cash until they outsell the number of cars they sold the previous December, said Robyn Eagles, manager for Honda North America public relations.
“If a dealer sold 100 cars last year, they do not get any of that money until they sell 100 or more cars this month,” Eagles said.
Cap on payments
The payments are capped at 20 percent or 1 unit over last year’s sales, whichever is higher, Honda’s memo said. That means if the dealer sold 100 vehicles in December 2012 and sells 130 cars this December, the dealer would receive $60,000 -- or $3,000 each for only 20 units above the year-ago total, because those 20 units represent 20 percent above the December 2012 volume.
Honda of Covington in the New Orleans metro market sold 148 vehicles during December 2012. The dealership has a chance to earn a potential $87,000 in additional cash this month if they can sell 177 vehicles, said Laurie McCants, the store’s general manager.
“My sales staff and managers are really motivated,” McCants said. “It’s money we hadn’t counted on and you may not hit it.”
Eagles said dealers can use the extra money to lower prices on new vehicles, finance other incentives to win business, or pay salesperson compensation. All new 2012, 2013 and 2014 Honda models are eligible.
McCants plans to hit her higher sales target by Christmas, she said. If her store does it, they will use the money to sell cars in the last week of the month to customers in their database who are upside down in their loans, she said.
“The banks limit the amount you can finance. If someone is $7,000 upside down, other manufacturers can offer huge rebates to get them financed. Honda has historically not had big rebates,” McCants said. “We’ve already said this morning we know some customers who would like to do trade-ins, but are seriously upside down. We’re contacting them and saying, ‘Come see us after Christmas,’ hoping we’re at the bonus money level.”
In November, American Honda reported sales of 116,507 units, down slightly from last year’s 116,580. The industry reported a 9 percent sales gain for the month.
But the automaker said this program is not in response to the flat November sales result, which Eagles said was not a disappointment. She and Mendel say November of last year was a record month for the automaker, making for an unfair comparison this year.
“We are coming out of the second-best November we have ever had and so far we have received nothing but positive feedback from dealerships about this program,” said Mendel. “We look forward to a strong December with their support."