Honda Adopts Western Style Relationship with Dealers in Japan

Honda Motor Co. wants its dealers in Japan to assume more risk for inventories in a bid to push domestic sales to 1 million vehicles per year, The Nikkei reports.

Unlike its rivals, Honda continues to build cars to order. The system, which dates to the 1960s, results in low inventories. But it also puts almost all marketing responsibility on the company. And it means retail customers may be forced to wait months to take delivery on a popular model.

Honda's new system will push dealers to carry larger inventories based on their forecast of local demand two or three months ahead. The technique, common in the U.S., puts more pressure on dealers to develop their own promotional techniques.

Honda will introduce the system among its biggest dealers first, according to The Nikkei. The newspaper says the company expects to involve its entire 2,200-dealer network in Japan within the next three years.