Honda Division is bolstering its dealer advertising in major metropolitan markets by providing them with new lavish funds. In the Cleveland area, meanwhile, Honda dealers are planning to spend $5 million annually on regional, or Tier 2, advertising, a large increase from the current $600,000. In the New York area, Honda dealers are expected to receive a maximum of $50 million in the next 12 months from Honda for the advertising. And because these dealers have created a regional group to spend the amount, they have to spend not a cent on Tier 2 advertising. According to Honda dealers, they have trailed rivals for years in regional advertising, in which dealerships purchase ads collectively in major markets. One dealer remarked that Hyundai and Kia have been particularly good at filling the vacuum.
Honda’s new funding program is seen to increase ad spending during a time when Honda is rolling out its redesigned Honda Accord and other refreshed vehicles, according to Rob Sabbagh, vice president of Bay Ridge Honda in New York and president of the newly formed Tri Honda ad group. Chris Martin, a spokesman for Honda disclosed that the Tier 2 funds amount to 1 percent of the invoice price of each car sold at wholesale to participating dealers.
Honda, however, doesn’t have a funding mechanism in place to direct money to regional dealer associations, forcing its dealers to voluntarily chip in money for Tier 2 advertising efforts. Martin remarked that the new funding program will allow dealers to “really do it right." A Honda spokesman, however, declined to say how much the program will channel to dealer associations nationwide. Martin noted that to avail of the funding, Honda's nearly 1,100 dealerships must join a regional advertising association. He added that Honda's contribution per vehicle sold will go directly to each association.