Honda acknowledges the guidelines are strict but says they are in place to protect its brand. Most dealers agree, noting Honda's residual values are consistently among the industry's strongest.
Still, some dealers say the restrictions, particularly those on advertising prices below invoice, limit their ability to compete.
"I'd like to see Honda take the handcuffs off of us and let us be aggressive," said Doug Waikem, owner of Waikem Honda in Massillon, Ohio. The Waikem family also owns Ford, Hyundai, Kia, Mitsubishi, Nissan and Subaru dealerships in Massillon.
This year, he got a letter from the Honda Compliance Headquarters after his store advertised a Civic on TrueCar.com for about $100 below the invoice price. "You have to price below invoice to get noticed on TrueCar," Waikem said, adding that his Hyundai and Kia stores pull in significant traffic by offering certain models below invoice.
In Raynham, Mass., Adam Silverleib, vice president of Silko Honda, said he has seen what happens when lowball pricing becomes the focus of dealer marketing efforts. A few years ago, a large competitor, Boch Honda, opted to forgo Honda's marketing assistance and so was free to advertise vehicles below invoice. "It destroyed the market for all of us," Silverleib said.
However, he understands Waik-em's viewpoint. Honda has $3,000 in what Honda calls flex cash on the Crosstour, making it possible for dealers to offer the slow-selling vehicle below invoice. Honda also is offering $500 in dealer cash on the Civic, which could enable a dealer to sell the LX automatic model below its invoice price of $18,632.
"We can do a deal below invoice, but we can't advertise that," Silverleib said. "We should be able to tell the customer the price they can expect when they come in to look at the car. But we have to advertise the invoice price, which obviously isn't working in the case of the Crosstour."
Boch Honda officials didn't respond to requests for comment.
Jeff Conrad, Honda Division general manager, acknowledged in an interview that Honda is having a "challenging year." Through the first seven months of 2014, Honda brand's U.S. sales are down 1 percent to 784,913, while the overall U.S. market is up 5 percent.
Accord and Civic sales are up slightly, and CR-V sales are up 6 percent. But sales have dropped for the aging Pilot (down 19 percent) and Odyssey (down 7 percent). Crosstour sales are down 28 percent.
Conrad said he "totally gets" dealers' desire to advertise more aggressive prices, but added that the marketing guidelines are designed to manage long-term brand value.
He said Honda is aiming for steady sales growth through the rest of the year but declined to elaborate on specific marketing plans. The company expects dealers to get a lift late in the year when the updated CR-V begins rolling into showrooms.
The prices Honda dealers advertise in print, online, on TV or on radio are monitored constantly by the Honda Compliance Headquarters, which is operated for Honda by Ansira Partners, a marketing communications company. To ensure compliance with Honda's guidelines, dealers or their advertising agencies can submit ads to headquarters for review. Dealers can expect approval within 24 hours, Conrad said.
The operation also checks ads to catch typographical errors, banned phrases, incorrect photos and improper use of the Honda "H" badge and the logo type prescribed for the Honda name.