Jim Lake, CEO of Vern Eide Motorcars and chairman of the Honda National Dealer Advisory Board, said the Honda product lineup is the best it's been since he became a dealer more than 30 years ago.
But while the average Honda dealer is prospering, Lake said some regional economies -- including his -- lag the rest of the country.
That's no reflection on Honda, he said, but it means you can't assume all Honda dealers are prospering equally.
Vern Eide Motorcars is based in Sioux Falls, S.D. The group has seven dealerships in South Dakota and Minnesota, including two Honda stores. It also has two motorcycle stores and a stand-alone used-car lot.
Lake, 57, said he worked his way up in dealerships, from a job as a salesman right out of college. He said he learned the trade from Frank Stinson, a dealer who founded Dallas-based Roundtree Automotive Group, and the late Vern Eide, the namesake of Vern Eide Motorcars.
Special Correspondent Jim Henry spoke with Lake.
Q: How was 2016 for Honda dealers, and what's the outlook for 2017?
A: What I understand, from talking to all the Honda dealers I come in contact with, is that overall Honda dealers are pretty blessed with the product lineup Honda is providing us. Whether it's a great year for an individual dealer, that's a little bit of a regional thing, not that that's got anything to do with Honda per se, but with local economies.
2016 was a record sales year. Dealers must be happy.
To answer the question nationally, I think everybody's pretty happy. As chairman, I sat through the NADA [dealer satisfaction] survey presentation, and the scores there would also say the Honda dealer body is pretty happy.
How about your own local economy? I hear analysts worrying about regions that depend on the energy industry. Does that include you?
We're directly affected. Sioux Falls itself, the metro area is banking and health care. But our general economy -- and this is true for North Dakota and South Dakota, but particularly North Dakota -- they say around here, "They turned the oil on a few years ago, and now they turned it off." That, and local agricultural prices, that's something everybody is aware of.
How many dealerships do you have?
To give you a little bit of history, we have two Honda stores and an Acura store. We also have a Chevy store in Minnesota, a powersports store here in Sioux Falls that carries multiple brands, plus an Indian motorcycle store in Sturgis, S.D., right on Main Street, an exclusive Indian Motorcycle store, a Mitsubishi store here in Sioux Falls. In addition, I'm partners with one of our employees -- a guy who started out as one of our employees -- in a Ford store and a Chevrolet-Buick-GMC store in Mitchell, S.D., about 70 miles from here.
Sturgis is home to a giant annual motorcycle rally, right? Is it the ultimate place to have a motorcycle franchise?
It's a very seasonal business out there. For the six or eight weeks leading up to and including the rally, it is extremely busy. It gets extremely lonely in December.
Honda Financial did poorly in this year's J.D. Power Dealer Financing Satisfaction Study. What was up with that?
I would just tell you this: They are in the process of a technology change and a systems update. So there are some things that are inherent to going through that process. Unfortunately, as they bring these things on, it's not just a few-months thing, it's a multiyear thing. ... That has caused some challenges. On a personal level, we've experienced those things.
But it's not something that's really going to affect the customer experience long-term. In my personal opinion they are working extremely hard to win the hearts back of their customers -- both sets of customers, the public and the dealer body, which they are supporting with funds to finance cars ... I think it's just going to take a little bit of time, a little bit of patience.
What are the major issues for Honda dealers? Sales are good, so is it getting enough product?
Availability has improved. As far as our core models -- Civic, Accord, CR-V -- volumes have been pretty good. All of those things have progressed as I believe we would want them.
Like everybody, are you looking to get more trucks?
As far as light-truck production, the Pilot has been a wonderful product for us. The new Ridgeline has been a hot product for us. The CR-V, I mentioned. Always, naturally, as a dealer you always want more of those.
Dealers need to be protected from themselves. Having too many is not good, having not enough is not good, you want to be someplace right in the middle.
What, if anything, is missing in the product lineup?
Of course if you ask any dealer, we never have enough. Having said that, I got in the Honda business back in 1985, and I'd been in the business for six years before that, and I can say that since 1985, it is the best, up and down the product lineup, the best I've seen since I've been a dealer.
A couple of the cars they build are just awesome. Being an old Honda guy, I can appreciate the new Accord hybrid. It's one of the finest sedans, I think, that's ever been built, and in my opinion it's the best Accord ever.
How about more trucks?
Would we like another four-wheel drive someplace in the middle of the segment, to add to the lineup? Sure. Considering the market where I live, would I like to have a bigger SUV? Absolutely. And everybody at every brand wants a convertible, and everybody wants a sports car.
But we have a wonderful product lineup today. I think it's fabulous. They've given us a better lineup than we've ever had. The first 2017 CR-Vs hit the ground here in the midst of a snowstorm. That car's going to be awesome.
What's so great about it?
Unless something is totally shocking and I missed my mark on this deal, I think it's going to be a huge winner for us -- for customers, for us, the dealer body, and for Honda. Particularly in our neck of the woods, that car can represent up to 30 percent of our total monthly deliveries, as the market has shifted, particularly in the Snow Belt that runs through the upper half of the country.
Is it features, styling, or what?
The value they put in that car for the price is kind of incredible. The car they had last year, compared to the car they have this year, the price only goes up for the most commonly ordered trim line, the EX, by $600. For that, you get the full safety suite, the total new packaging, the rear window spoiler. It's two to three times the value from the previous model, for what's kind of going to be a standard, year-to-year change, pricing-wise.
The styling of the car, I would say it's got a bolder look to it. The last time we had a waiting list on CR-Vs -- when people put their names on them before they had seen the car -- I can't remember the last time that happened. But we had eight or nine people come in and say, "Done. Put me on the list."
With sales increasing, is Honda on the dealers to add service capacity?
I think there are real conversations between dealers and Honda. I don't know that there's undue pressure. There's a confidence level among dealers, that product is coming, volume is coming. I think that speaks to the relationship between the brand and the dealer body. But there hasn't been a lot of investment in facilities, the last 24 to 36 months. We're in the middle of one; we're upgrading the Honda store in Sioux City.
Is Honda helping out?
One of the things they are continually working on is, everybody's racing to keep up with tech -- with the cars in service drive, in the whole arena of communicating with the customers. I have been kind of impressed with some of the initiatives they are undertaking to streamline the process in the service drive. The need to handle more volume, to touch more cars in the service space, is upon us.
At the 2016 NADA convention vendors showed off tools like self-serve reservations, and license-plate readers so the service writer knows who is pulling in and what for; are you adopting those things?
We are just actually shopping that technology as we speak. Honda has some of those solutions and they are introducing more of it. And there are third-party vendors that are doing that sort of thing. We used to think these things took years. Instead, they're taking months. Service writers, instead of living on a keyboard, will be living on tablets. And the transparency that's coming to service is pretty exciting.