Why Honda, Acura dealer showrooms may shrink

Honda and Acura dealers have been coping with sales lots that have just single digits of days’ supply.

“I joined American Honda in May of 2020, and between our Honda and Acura brands, we had roughly 400,000 vehicles in dealer inventory,” Gardner said. “Today we’re sitting with about 25,000.”

The dealer networks have become more disciplined about selling into their pipelines to keep business moving forward, he said, and that means communicating production dates and estimated arrival times to their customers.

“These are things that in a 400,000-unit inventory environment we were not worried about, because every combination we built was somewhere sitting in a dealer’s inventory,” he said. But now, he said, having a robust 60- to 75-day supply is “a completely inefficient way to run our business.”

“We’re trying to be very cognizant of the dealer’s fixed costs as we move forward and not overburden them, perhaps as we historically may have done so,” Gardner said.

Also, there are benefits to running the business with a 30-day supply, or even 20. “Certainly we’re going to try to run the business with much lower inventory than we had,” he said.