Honda's U.S. dealers want to be part of Sony Honda venture's EV launch plans

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By Satoshi Sugiyama and Ben Klayman

TOKYO/DETROIT (Reuters) - A new joint venture formed by Japan's Sony (NYSE:SONY) Group Corp and Honda Motor plans to introduce a premium electric vehicle later this decade, and the automaker's U.S. dealers are anxious to be part of the sales process.

Sony Honda Mobility said on Thursday it was aiming to deliver the first of the unnamed EV by 2026, starting in the United States, and will sell them online.

The success of Tesla (NASDAQ:TSLA) at selling EVs without franchised dealers is putting pressure on all established automakers to overhaul their retail networks. That leaves dealers across most brands concerned about their place in the changing world and whether profits will be squeezed.

The online aspect of the Sony Honda plan, as well as the lack of details around how the vehicle will be sold and serviced, has raised questions with the Honda and Acura brand dealers. Many nonetheless expect Honda to work through the existing retail network.

"These issues are certainly a concern," said Brian Benstock, general manager and vice president of Paragon Honda and Paragon Acura in Queens, New York. "The best path forward is with the dealers."

"We have a role (automakers) can't replicate," said Benstock, who also is on the Acura national dealer advisory board and has spoken with Honda officials about the new vehicle. "There's no way that Honda wants to hurt their existing dealer body."

Some dealers questioned why Honda would even consider trying to work outside the current U.S. sales network given its national reach. Honda has about 1,100 Honda dealers and 270 Acura dealers.

A Honda spokesperson referred questions about the joint venture to the new company. Sony Honda spokesperson Mai Nagadome said there are still a lot of details to finalize, but selling through the dealers has not been ruled out and customers would feel uneasy without some kind of after-sales service process.

"The cost of continuing to develop (internal combustion engine) products along with EVs and autonomous tech and software for the next generation vehicles is proving to be quite the challenge," said Peter Hennessy, dealer principal of Atlanta-based Hennessy Automobile Companies, which includes a Honda store. 

"I get teaming up with Sony, but it should be done in conjunction with the dealer network, not outside it," he added.  

Sony Honda officials promised the vehicle - to be built at one of Honda's Ohio plants - will include advanced driver-assist features and a new software system developed by Sony that offers cloud-connected services that generate recurring revenue. They were the first details on the venture's efforts since the project was launched in June.

A concept of the vehicle will be shown at the CES technology show in Las Vegas in January.

Honda has been very secretive about the Sony joint venture, according to some dealers, but others suggest that is simply because the timeline is so far out.

Privately, some dealers warn a move to circumvent the dealer network could potentially violate their franchise agreements, but also acknowledged the use of a different brand could be a way to avoid that risk for Honda.

Sony Honda officials declined to say under what brand the vehicle will be sold.

Mike Law, who runs eight import brand stores for LaFontaine Automotive Group, including a Honda store in Dearborn, Michigan, feels the heavy investments required around EVs favor using existing dealers.

"As much as maybe some people want to push the dealers out, I believe the consumers still enjoy the process of the purchase," he said.