Better Honda Performance in 2002

After being No.1 in the non-national passenger car category throughout the 1990s, Honda is likely to have lost the title in 2001 (official data for whole year sales from the Malaysian Automotive association is not available yet). There are various reasons for the decline, among them the fact that there was a changeover in distributors from Kah Motors to DRB-Oriental-Honda (DOH) in the middle of the year, some disruption to the sales network shortly after DOH began operations and of course, the effects of September 11.

“We acknowledge that our Honda sales were down last year but we are putting that behind us and focussing on a better performance in 2002,” said DOH President/Chief Operating Officer Datuk Abdul Rashid Abdul Rahim. “DOH is gearing up to regain the crown and has planned a number of marketing activities for 2002 to sell many more Hondas. At this time, we are reviewing our original forecast of 12,500 units and will announce the 2002 target shortly.”

Datuk Rashid made the statement at a press conference following the opening of a new dealership in USJ, Subang Jaya, Selangor, today. The new dealership, USJ Car Express Sdn Bhd, is among the five new dealerships being opened in the Klang Valley. USJ Car Express and another dealership, Kosmo Kars Sdn Bhd, are located in the Subang Jaya area while the others are in Cheras, Setapak and Taman Tun Dr Ismail.

These five new dealerships bring the total authorised Honda dealers in the country to 38. It is by no means an optimum number, said Datuk Rashid, but establishment of additional dealerships will depend on whether or not an area requires a dealer to service customers.

“There are many applications for Honda dealerships from all over the country but we are not appointing dealerships just to have the numbers. What is more important to us is to achieve proper coverage so that our customers can have access to services,” he explained, adding that East Malaysia would be receiving more attention this year.

He added that some of the applications were from dealers of national makes who felt they would like to prepare for the open market by selling other brands. “However, we are not giving anyone priority and when we consider any new dealers, we look at their willingness to commit for the long-term and make substantial investments,” he said.

He added that all dealers are expected to be willing to offer sales, service and spare parts – ‘3S’ in the industry language. DOH will not appoint dealers who just want to sell cars and not be involved in after-sales support for their customers.

USJ Car Express is an example of a ‘3S’ dealer as the company began by servicing Honda cars. From that activity, it has now decided to go into sales and is thus able to offer a full range of services to customers.

“Just doing service business alone has some limitations since the number of service bays controls the number of customers that can be handled in a day, so there is a limit,” explained Wilson Teoh, Managing Director of USJ Car Express and a 20-year veteran in the car business.

“On the sales side, we can sell many cars and it depends on our efforts and not the physical size of our showroom,” he said.

Most of the new dealers are presently operating from temporary premises. DOH has asked them to establish facilities where the showroom and service centre are together for the convenience of customers.

DOH has no plans to establish its own branches and will have only dealerships. This approach, in contrast to the traditional way of doing the car business here where there are more branches than dealers, is considered more effective.

“We prefer to have dealers who are entrepreneurs as they have made big investments and therefore would work hard to get good returns in future,” said Mitsuru Ozaki, Managing Director/CEO of DOH.

He said that DOH will be giving a lot of support to all its dealers to enhance their performance. Additionally, DOH will also be organising various promotions aimed at promoting interaction with customers. However, it has no plans to develop any used car business and feels that the present sales approaches taken by dealers with regard to handling trade-ins works well enough.

According to Mr Teoh of USJ Car Express, the level of support coming from DOH is very good. “We are really happy with the way DOH is working with us. They deliver the new cars to us and send spare parts twice a day to our service centre,” he revealed.

Elaborating on the delivery of cars to the dealers, Datuk Rashid said that DOH wants to ensure that customers get their cars in the best condition possible. It already has its own QC personnel in the assembly plant and has invested in car-carriers to transport the finished cars. In the past, Hondas from the assembly plant were typically driven to the dealers by ferry drivers.

“We are aware that the practice of using ferry drivers and driving brand new cars great distances is not a good one and has given our customers a bad impression,” he said. “It is understandable that any buyer would like to get a new Honda with minimum mileage and not a few hundred kilometres – done by someone else, to make things worse – even before he or she gets to drive it. Furthermore, we know that the ferry drivers have been seen speeding in brand new cars and this too is something that contributes to a negative perception. That’s why we use car-carriers even though it involves some additional cost.”

On the possibility of further price changes as the yen is weaker now, Datuk Rashid said that it is not fully relevant to the locally-assembled models which have components from Malaysian sources and also sources in ASEAN. In fact, while some parts come from Japan, there are also many others which come from other countries, including Canada and India, as part of Honda’s global sourcing policy.

“In any case, we don’t want to make changes in prices frequently and cause dissatisfaction to our customers. We will, however, pass on any cost-savings we can achieve through other means such as special offers or additional accessories from time to time,” he said. An example is the current promotion of a special price for the original rear spoiler and Type Z grille for the Honda City.

A new CR-V has already been launched in Japan and it is confirmed that this model will also be assembled in Malaysia soon. Mr Ozaki declined to give a launch date but going by past examples, it takes about 6 to 9 months after the original launch in Japan for a locally-assembled model to go into production. Thus, it is possible that the new CR-V could be rolling out of the plant in Johor by mid-year, if not earlier.