27 May 2019

Honda has told its franchised retailers it will shrink its network from 155 to 125 sites over the next three years as part of an initiative to double return on sales from 1% to 2%.

Speaking exclusively to Auto Retail Agenda, Phil Webb, Honda Cars managing director, said: “Honda UK will be reducing its dealer network in order to create a sustainable and independently viable business model for the future – both for Honda UK and for our retail network. Currently at 155 dealers and with a 1% return on sales, the objective over the next three years is to move toward having 125 dealers and to double our return on sales.”

The latest edition of Auto Retail Network’s Franchising Report shows the Honda network currently registers 339 cars per site, well below the UK average of 435 cars per franchised dealer per year.

“While there are number of elements impacting this decision, such as changing consumer behaviours and the powertrain shift as we move toward 100% electrification, the reality is that the average drive time for a new Honda retail sale is 35-40 minutes. Our network is currently mapped on a 20 minute drive time. Competitor brands with similar market shares have smaller networks, generating the opportunity for a higher return for each site,” said Mr Webb.

“We have already made changes around our representation model with the introduction of hub, spoke and island. This has enabled significant efficiencies, but we need to move this further. In light of the above, we will be reducing the network to 125 sites over the next three years, ensuring that we are focused on doubling our return on sales for our investors.”

Tags: Honda, Honda Retailers, Phil Webb