Fewer auto repairs could vex Honda dealers in '23

A year of low supply and depressed sales could cause a ripple effect for Honda dealers on the service side of the house in the coming months.

Though Honda started the year with 44,000 vehicles in on-hand inventory — roughly double the amount it had at the beginning of 2022 — Bill Feinstein, chair of the Honda National Dealer Advisory Board, said the inventory situation is more challenged that dealers expected.

"Honda has stated they've been working to increase output at the plants back to 80 to 90 percent in the first quarter and then back to full production sometime in the second quarter," Feinstein said.

"It does not seem like they're there yet. And it's to be determined whether they get there," he said.

Honda closed 2022 with sales down 33 percent, mostly due to depleted supply, logging one of the steepest declines among mainstream brands. With fewer units in operation across all dealerships, there won't as many vehicles to fix.

"Going into [2023] — [after] two-plus years of this — it could have some significant impact on fixed operations," Feinstein said.

This will be especially evident as a slowly correcting supply picture and higher interest rates cool demand, putting pressure on profits. Dealers enjoyed healthy profits in 2021 and 2022, but Feinstein said it's likely things will settle back to "historical norms" by the second half of 2023.

Feinstein called fixed operations one of the "bright spots" from last year, bringing in more dollars per repair order because of the deferred maintenance that built up during the pandemic, even though the frequency of visits dropped due to lower mileage.

But change is ahead.

"The bigger concern over the next 18 months is how the lower [units in operation] will affect service operations," he said.

Feinstein pointed to Honda's ability to get parts to dealers faster as one area of improvement.

"The cars we have in our shop, we're able to get parts for, get fixed and get them on their way," he said. "Certainly during the pandemic, we had some real issues."