One of the largest Honda motorcycle dealerships in the country, Arizona Honda, has gone out of business.

Arizona Honda, 4710 S. Palo Verde Road, was built to American Honda's "Tier 5 Powerhouse" dealership specifications but struggled with plunging sales the past couple of years, said owner David Phillips.

Phillips said the 25,000-square foot dealership, opened in 2004 and "didn't lose money, but didn't make much. Sales were good for two years, '04 to '06. And then when things went bad … we said, 'We can't support 25 people.' "

The state-of-the-art dealership was built by local commercial real-estate developer and owner Larsen Baker LLC and leased to the Phillips family.

Phillips said the dealership had 60 employees at one time, and continually cut back in the last two years, finally paring the staff to 10 in December.

"In the market we're in today there are way too many dealers," Phillips said. "There are eight dealers in Phoenix that sell Honda (motorcycles). And we've got two dealers here that are less than 10 miles away.

"If you want to sell a bike you have to sell it for less than you paid for it, that's the way it is today," Phillips said. He said dealers have to make up the difference by selling accessories, extended warranties and service.

He said that may improve when the economy rebounds, but he thinks that's "three or four years away."

The dealership moved from a smaller storefront on Palo Verde just west of the Veterans Memorial Overpass at Aviation Parkway.

One of the owners of the property, Don Baker, said he started out as a customer of Arizona Honda at its previous location 15 years ago, when he began buying Honda 50s for his then 7-year-old son and himself.

He said it was prestigious to have a Tier 5 Honda dealer in Tucson.

"They sold everything, except Honda automobiles. It was a wonderful concept," Baker said.

"A Tier 5 is a dealer that has made a commitment to build a Honda-only store to our image and continue the relationship with Honda only," said American Honda spokesman Bill Savino.

In return, Savino said, the dealer gets a guaranteed supply of Honda products and automatic restocking. "When you go to a Powerhouse dealer you expect to see all Honda has to offer," Savino said.

Savino said he couldn't comment on whether American Honda has any plans for replacing Arizona Honda.

American Honda has already reclaimed the closed store's inventory.

Tucson now has two other authorized Honda motorcycle and ATV dealerships that can provide parts and service.

Musselman Honda Center, 2302 N. Stone Ave., is one of oldest Honda dealers in the country - and the oldest still operated by the original owners, Savino said.

The shop started selling motorcycles in 1948 and began carrying Hondas in 1959, according to owner Mark Kingsley, the grandson of founder Darvin "Pappy" Musselman.

Ride Now Powersports, 7501 E. 22nd St. is Tucson's other remaining Honda dealer, and also carries Yamaha, Suzuki and Kawasaki.

Kingsley said motorcycle and ATV sales have been plunging locally and nationally since 2007 and fell by half again in 2009.

"In 2006 we were all having a heyday in unit sales," Kingsley said.

"Hell, no," said Kingsley when asked if he has any interest in moving into Arizona Honda's former facility at Palo Verde and Interstate 10.