Honda dealers in the United States have been caught in the middle of a fight between Honda and truecar.com over prices advertised online.
According to the Detroit News, Honda has announced its dealers that it won’t give them advertising allowances if they offer vehicles cheaper that the invoice price on TrueCar, an online auto sales service.
The Japanese carmaker thinks that disclosign cut-rate prices damages its brand and makes its dealers compete with one another for customers rather than with rival automakers. On truecar.com, the price for which dealers are willing to sell cars can be viewed by any visitor, while in a showroom transaction, the buyer negotiates the price in a private setting, hidden from people looking at the same model.
The same system found on truecar.com is used by other large auto shopping referral services, including Consumer Reports and USAA, which provides financial services to members of the U.S. army.
The dealer cost of a vehicle can be 5 percent or more below the invoice, because of various back-end allowances and payments. USAA threatened to remove the Honda’s brands from its Auto Circle no-haggle pricing program.
Honda motivates its decision by trying to protect its brands and support pricing. The company says it will not give advertising payments to dealers who offer Acura vehicles below the manufacturer’s suggested sticker price.