Juicy details aside, dealers say this is business as usual for many sales officials in Honda’s North American subsidiary. Although hints of the crimes became public only last year, franchisees say they have been giving executives gifts and money to ensure preferential treatment for nearly two decades. There is even a code phrase for the practice: “passing the football.” The flag was thrown last spring during a civil-court case brought by a Manchester, N.H., Acura dealer. He charged that his business was destroyed because the district manager allotted more cars to a competitor who had given the manager an Integra and paid to send his son to college.
The automaker’s top U.S. executives said last week that they, too, had been victimized. The American Honda Motor Co., which has not been charged with any crime, issued a statement that it is “outraged and saddened” by the fraud and will use “aggressive legal action” to recover the money. Fortunately for the company reaction to the scandal has been muted in Japan. Ordinarily, rival companies there would welcome the chance to slam the renegade automaker, but the recent trade friction with the United States has pushed them to “circle the wagons” and remain silent, an auto analyst there says.
Japanese car analysts say that payoffs by dealers are uniquely American. Although lavish gift-giving is a tradition among businessmen in Japan and there has been a recent rash of corporate bribery and corruption. the problems don’t extend to Japanese dealerships because they are mostly owned by the manufacturers. But American dealers have been touched by such scandal before. Last year a Port Jefferson. N.Y., General Motors dealer pleaded guilty to borrowing billions of dollars from General Motors Acceptance Corp. for cars that did not exist.
Analysts doubt the headlines will seriously tarnish Honda’s image, but the automaker has other worries: a U.S. market-share decline from almost 10 percent in 1991 to 6.5 percent last year. A recent recall could cost the company $20 million. “The heyday is over,” says analyst Susan Jacobs. Maybe there’s a place for Danny in the showroom after all; it seems that Honda no longer sells itself quite so easily.
