Honda has now dropped the customer satisfaction index aspect of its dealer bonus scheme, as first reported by AM in October 2006.

The carmaker believes customer service is a core principle expected of all dealers and has shifted emphasis elsewhere. It is now looking at an ‘infrastructure payment’, building individual plans for each dealer to 2010 and focusing on areas such as showroom facilities, staffing resource and sales processes. Plans will be finalized this month.

Last year the retail network averaged return on sales of 1.3%, while average profits rose by £55,000 per dealer. Three-quarters of dealers increased profits. Honda expects them to make further improvements this year on the back of greater focus on aftersales – now accounting for a quarter of profits –and new car sales growth of 6% to around 104,000.

Two-thirds of the 190-strong network is at or exceeding Honda national average market share (4.17% last year). One-third are below for a number of reasons, including new businesses, management changes or recently acquired. The onus is on the field team to bring all dealers up to the national average.

“Dealers that are above national average can hold still rather than us burdening them with further growth. Those performing at the highest level for some time will be rewarded more – the bonus structure allows for this,” says Honda UK sales director Bernard Bradley. “We recognize strong performance and reward dealers appropriately.”

He refutes claims made by one dealer in AM (January 12) that Honda was increasing sales targets in the UK to act as “a safety net” for the Swindon plant. “Swindon is very important for us, but for both vehicles made there – CR-V and Civic – demand outstrips supply, so we won’t be asking the UK to act as a safety net.”

Honda’s ‘M25 group’, set up last year to look at ways to reduce costs in the London region, has reported back 25 ideas for consideration.

One is to reduce storage requirements at dealerships by Honda making more frequent deliveries and reduce car movements. Priority systems will ensure cars are delivered to the dealership in time for handover. A trial is already underway.

“We need to use the space at the dealership for retail, not storage,” says Ewan Ramsay, Honda UK general manager – cars.

Honda is also looking at synergies on purchases such as security systems and stationery by introducing dealers to partners able to offer discounts. The issue of high staff turnover will be tackled by a recruitment day held by the Honda Institute to attract technicians and sales staff.

“We have no plans to change trading terms, but we will look at practical issues,” adds Ramsay. Some of the ideas could be rolled out nationwide.