Honda rubs dealers the right way with its EV approach

Most Honda dealers in Canada plan to invest in their stores to sell the company’s first fully electric vehicle, the Prologue, when it arrives in early 2024, company executives and dealers say.

Of the 236 Honda dealerships in Canada, 175 will be ready for EVs by the end of 2023, said Hayato Mori, assistant vice-president of product planning and business development for Honda Canada.

The cost of Honda-mandated upgrades to a store is estimated at $300,000 to $400,000, depending on the amount of charging infrastructure already in place.

Some dealerships installed chargers when the Honda Clarity plug-in hybrid was introduced in 2018, Mori said. Others are undergoing renovations or even building entirely new dealerships, “so they will naturally have more costs,” he said.

Honda’s approach to preparing its dealers for EVs stands in sharp contrast to Ford in both Canada and the United States, where some retailers — especially in small markets — are balking at paying for upgrades. In Canada, Ford’s Model e Certified Elite program will require about $1.3 million in upgrades per rooftop and the Model e Certified upgrades about $560,000.

THE ACID TEST

Ford told its 440 dealers in Canada that they must enrol in the programs by Dec. 16 or forfeit the opportunity to sell EVs until at least 2027. In the United States, two-thirds of the automaker’s 3,000 dealers have signed up for the EV programs, CEO Jim Farley said Dec. 5. Ford is experiencing opposition over the programs in some states, including New York, where it is facing litigation.

Honda has received no such pushback from its dealers, Mori said, and has not established a tiered program or formal deadline the way Ford has.

A possible reason Honda dealers appear more willing is because the upgrading costs are lower than Ford’s. And Honda has a longer history of bringing EVs to market, Mori said. Many installed chargers when the Honda Clarity plug-in hybrid was introduced in 2018. Others are undergoing renovations or even building entirely new dealerships, “so they will naturally have more costs,” he said.

Honda is ensuring dealers are upgraded in the three provinces where Honda will introduce its EVs: Quebec, British Columbia and Ontario. Mori said it is reasonable to expect that any dealer who wants to sell the Prologue and future EV models will invest in the tools, training and infrastructure to properly service the vehicle.

“Dealers that do not feel ready may choose to do so in the future,” he said.

THREE-PROVINCE PRIORITY

Honda Canada told Automotive News Canada it will sell the initial supply of the Prologue in B.C., Quebec and Ontario because B.C. and Quebec have consumer rebates and enforceable sales mandates for EVs, while southern Ontario has broad EV charging infrastructure. B.C. also has the highest EV adoption rate in Canada, with EVs making up 17.5 per cent of new passenger vehicle sales so far, according to the province.

“In B.C., Ontario and Quebec, 94 per cent of Honda dealers are on board” with upgrading now for EV sales and service, Mori said. “Those that are abstaining are simply doing so for timing reasons.”

In a recent interview, Honda Canada President Jean Marc Leclerc said the company wants to ensure that Honda and Acura EV buyers have the best possible initial experience. Acura will bring the battery-electric ZDX utility vehicle to market in 2024, he said. Acura, a Honda division also overseen by Leclerc, expects its 51 dealerships in Canada to make the upgrades for EV sales and service.

The ZDX and the Prologue are co-developed with GM and are underpinned by the automaker’s BEV3 platform and its Ultium battery and drive systems.

“People cannot have a bad experience with an EV because that will really delay the progress that we’re expected to make,” Leclerc said.

“So, we’re really working very closely with the [federal] government to make sure that this happens [by ensuring support structures, such as a comprehensive charging network, are in place]. We’ve got to invest the dollars that are required to position us to be successful in the future.”

B.C. and Quebec have EV sales quotas and advanced infrastructure to charge EVs, Leclerc said.

“And they have compliance — they have the consequences for not hitting the percentages of the mandates that they’ve put forth,” he said. “So obviously that’s going to be a priority for us.

“You can have a [sales] mandate; it doesn’t mean that people will feel ready to buy them at that time. The last thing we want is to fast forward two or three years down the road and [find] we’re left with vehicles on dealer lots that are not selling.”

‘FULLY ON BOARD’

OpenRoad Honda in Brampton, Ont., planned to begin renovations in December to be ready for the Prologue, said General Manager Tak Takhar. The changes include an exterior face-lift and the addition of more chargers, specialized tools and diagnostic equipment, he said.

“We’re fully on board,” he said. “That’s the way the industry is going. I don’t mind at all. I feel good about it.”

OpenRoad is Honda’s largest-volume dealership in Canada, with about 1,200 new sales so far this year. Before the pandemic, new-car sales were typically 1,500 to 1,600 vehicles for a full year, Takhar said.

Westwind Honda in Lethbridge, Alta., is taking a slower approach, said General Manager Greg Flom. The dealership plans to erect a replacement building within 18 months, but Honda has been “slow-playing” the renovations, telling him not to rush into an investment estimated at $10 million to $12 million.

“[Honda is] telling me to proceed with caution” because the precise needs for the dealership are a moving target, he said.

“Honda has been great to work with,” Flom said. “They’ve been telling me to hold off the design for now.”

Smaller markets — Westwind Honda will sell about 200 new vehicles this year — are typically in areas that are underserved with chargers, Flom said. Popular destinations such as Calgary and Fernie, B.C., are each about 200 kilometres away, he said, so range is a concern.

“If you plan to go to Calgary for a day, and you have to plan two or three hours to recharge, you’re not going to get much done.”

In a small market like his, where EV sales are expected to grow more slowly, Flom wants to have a building that can service mostly internal combustion engine vehicles now but also be designed with the flexibility to transition to EVs as interest and sales grow.

With files from David Kennedy and Automotive News