CPO program keeps Honda dealers' hopes high

Dealer profits were one of the big surprises coming out of the year upset by the coronavirus pandemic. Honda was no exception — even as the brand's retailers absorbed a 17 percent drop in sales and underperformed the overall market.

Honda dealers are now looking for ways to hang on to those profits through the brand's rapidly growing certified pre-owned program and automaker support for non-CPO used vehicles.

"Profitability has been very, very strong for Honda dealers," said William Feinstein, chairman of the Honda National Dealer Advisory Board and president of Planet Honda in Union, N.J. Referring to the alarming arrival of the pandemic last year, he added: "In the early spring, I don't think any of us would have sat here and said we're all going to end up having a very good year."

Looking into 2021, he said that higher volumes and lower margins will likely return. The relative benefits of tight inventories, generous incentives and higher transaction prices will ease as the market returns to health.

And income from fixed-operations will continue to lag from work-at-home arrangements.

"As inventories and sales return to normal, what happens with gross profit per vehicle?" Feinstein said in an interview. "I tend to think that the evaporation in gross profit will happen, but I think it will happen over time. I don't think it will be dramatic."

Dealers have a positive outlook because of the brand's strong CPO program, more aggressively styled light trucks in the pipeline to better match consumer taste and relatively flexible facility requirements for dealers.

Honda has a new-generation Civic compact coming in 2021, and the redesigned HR-V subcompact crossover now in development will be uniquely styled for the North American market.

"We are definitely looking forward to a refreshed HR-V," Feinstein said. "I'm personally very excited about the new Civic that will be arriving. That will start our cadence refresh over the next few years.

"Based on the design cues that we have seen, Honda seems to be getting it right."