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Honda to bolster RVs

Date: 12 July 2006

Honda is planning to protect its future residual value position as it looks to grow fleet sales volume.

It is in the initial stages of a pilot plan with Lex Vehicle Leasing, the UK's largest leasing company. Under discussion is a plan to put end of lease vehicles into 'semi-closed auction' where Honda dealers will bid against Lex approved independent traders for three-year-old cars.

"We're currently in dialogue with Lex about the plan," confirmed Shaun Wootton, national leasing manager, Honda. "In the three-year-old market we believe there's a 6% gap between what we should be achieving on prices. If we introduced our network to independent buyers we would get higher trade values."

Honda is expecting to expand fleet sales from 15,000 vehicles in 2006 to 22,500 in 2008. Hand in hand with the sales rise is an increase in end of contract returns, which are expected to double to 14,000 in 2008.

"If the pilot is successful it should boost RVs, provide profitable cars for our network, and increase our volume with lease companies while lowering monthly contract hire costs," continued Wootton.

Lex already works with Honda, managing the vehicles under the Honda Contract Hire programme. The pilot, if successful, would be rolled out with other selected contract hire firms.

In addition to the RV enhancing programme, Honda is also planning to launch a web-enabled SMR database that would feed real-time updates to leasing companies.

According to Honda, existing CD-issued SMR updates are too slow and inefficient. The new web-based solution would go live in 2007.

A recent SMR survey by Maintbook confirmed that Honda was 2.5 times better than the industry average in maintaining costs within the predicted SMR budget. Honda cited average labour rates of £55 an hour across the dealer network and vehicle reliability as key reasons for the success. A new five-year exhaust warranty has also been introduced.