Honda Cuts Dealer Margins in Canada to Fund EV Shift

Overview

Honda is making significant changes to its dealer margins in Canada, reducing them by up to 44 percent. This move is part of Honda’s transition to electric vehicles and away from internal combustion engines. The impact of these margin cuts will affect dealers and consumers alike.

Details of the Margin Cuts

According to a report by Autonews Canada, Honda is implementing margin cuts that will decrease profits for dealers by at least 2 percent. This reduction could amount to a 44 percent decrease in profit margins for some models. For example, a $35,000 vehicle could see a $700 profit loss due to the margin cuts.

Dealer Reactions

Dealers are expressing frustration over this decision, calling it a “blatant money grab.” Some dealers are considering passing on the cost to consumers by introducing additional administrative fees. However, Honda’s current policy does not allow for such fees, which may lead to further discussions between dealers and the automaker.

Potential Legal Challenges

Dealers may explore legal avenues to challenge Honda’s margin cut policy based on Canadian franchise laws. This approach has been used by American dealers in the past to protect their profits. In the USA, the federal government is also working on regulations to eliminate junk fees associated with dealers, highlighting the ongoing battle between dealers and automakers.

Conclusion

While Honda has yet to confirm the specifics of the margin profit shift, the impact of these changes on dealers and consumers remains a topic of concern. The automotive industry continues to evolve, with electric vehicles playing a significant role in shaping the future of transportation.