Honda axes Jazz, restructures Australian operations

Honda Australia has announced sweeping changes to its business in Australia that will effectively replace owner dealers with agency-based sites offering fixed pricing and fewer models.

As part of its new Australian business model moving forward, the Japanese marque has confirmed the Honda Jazz hatch and Honda City sedan will be axed, and there will be less focus on models apart from the HR-V small SUV, CR-V medium SUV and the Civic hatch and sedan.

Honda says its revised retail structure,

“The Australian market has seen 23 consecutive months of decline and every automotive business is rapidly changing,” explained Honda Australia director Stephen Collins.

At present, there are 71 Honda Australia dealers operating a total 105 sites throughout the country.

Under the new measures, Honda will replace most of those sites with a “hub and spoke model” whereby dealerships will receive a commission on sales and effectively become display showrooms and handover points with satellite service centres.

As its New Zealand counterpart has done for many years, Honda Australia will look after the rest, retaining ownership of stock including demonstrator models and applying fixed, uniform pricing across the country, negating haggling between dealers and customers.

Honda expects the number of its Australian outlets to “not materially change” but admits the number of cars it sells will effectively halve. Last year, Honda sold 43,800 new vehicles in Australia.

“We are still in consultation with our network so cannot confirm final number of owners yet,” a Honda Australia spokeswoman said.

“This [new agency model] will allow us to design a Honda network that is suitable to the size of our business yet still allow us to service our existing customers in a convenient manner.

“This may see the creation of different types of retail representation, including satellite service centres.”

The industry body for dealers said the timing of Honda’s decision lacked compassion and is calling on Honda to fairly compensate.

“Our thoughts are with those affected Honda Dealers, their employees and their customers,” said Australia Automotive Dealer Association chief executive James Voortman.

“I am stunned by the timing of this announcement, as it simply lacks compassion. So many dealerships are struggling with the immediate effects of COVID-19 and now these Honda dealers and their employees have been told that they will be closing down,” he said.

“Honda has not said how many Dealers they have terminated, but our understanding is that it is a significant portion of the network. Honda should come clean and specify how many dealers they will be terminating,” he said.

The AADA has called on Honda to adequately compensate dealers “for the significant investments they have made in the brand, be it capital, time or effort”. Honda says it will not be discussing compensation publicly.

“It underscores the urgent need for strong Automotive franchising laws in Australia. Laws that will set a minimum standard of conduct for offshore manufacturers operating in Australia,” Voortman said.

“In the last six months we have had Honda, Holden and Infiniti either pull up stumps from Australia or significantly cut back their networks, leaving a trail of destruction in their wake.

Honda argues the days of consumers feeling pressured to buy a certain model at a dealership will effectively end under the new structure.

“Customer preferences are changing and other industries have evolved while the automotive industry still uses a model that is decades old,” Collins said.

“We have excellent customer retention and want to reward our loyal and highly valued customer base with a more relational and less transactional experience. We know our customers want good value, strong resale value and a seamless ownership experience on top of reliable engineering and quality vehicles."