The company had more than 1,000 dealers at the end of 2005, when Honda first began consolidating into fewer but larger stores. It was down to 922 by the end of 2006, and will decline to 870 by late 2007.
The reorganization is in part being pushed by the shrinkage of the domestic market as a whole. Sales are now approaching the end of a second full year of steady decline, and that is inevitably affecting the financial stability of every company’s dealers.
But Honda’s problem is complicated a bit by the fact that a lot of its dealers were inherited from the motorcycle business in which the automaker got its start, not long after World War II. As a result, many locations, especially those of independent franchises, are too small to handle the functions of a modern dealership.
The latest push aims to consolidate a lot of independents with directly run dealers who can provide the capital to enlarge showrooms, or integrate smaller operations into larger ones.
The company has already compressed eight directly run dealers and 11 independents this year, producing half a dozen larger operations in their place.