Honda: “We are not going away”

Honda has reaffirmed its commitment to keep selling vehicles in Australia despite posting its worst annual sales figure in modern history last year, when the overall market set a new sales record.

And as its results improve in 2024, Honda Australia has predicted its controversial move to the agency sales model will increasingly pay off as conditions get tougher for traditional franchised dealers in the local new-car market.

“There’s lots of commentary around Honda’s fallen off a cliff,” Honda Australia director Carolyn McMahon told automotive media last week.

“Honda is still here, we are not going away, we want to make sure we are here for the future and we will step-by-step get this [agency] model working well.”

McMahon claimed that dealers – or Honda Centre partners, as it calls them – are “loving” the agency arrangement because, unlike franchise dealers, they don’t own the cars they sell and don’t have to finance floorplans and deal with increasing interest rates.

“Honda Centres are finding that benefit really coming home now and they are quite happy they don’t have to hold the inventory and that’s now a Honda responsibility,” she said.

McMahon argued franchised dealers were struggling as sales and profit margins dipped and supply increased post-COVID.

“During the COVID years they had a sugar hit in the industry and the industry has done very, very well,” she said.

“But we are seeing very, very quickly those grosses starting to come down. And we think the original design of our system will more and more come into play.”

Honda Australia shifted from a traditional franchised dealer sales model to an agency retail strategy on July 1, 2021, when it introduced a fixed-price, no-haggle vehicle price and servicing arrangement.

It then became embroiled in legal actions with one of its former dealers and the Australian Competition and Consumer Commission (ACCC).

The shift to agency sales coincided with Honda posting its worst two sales year in a row since VFACTS began recording registrations in 1996. It sold 14,215 vehicles in 2022 and 13,734 in 2023 – down from a peak of 60,529 sales in 2007.

But Honda has shown signs of life in the first quarter of 2024, lifting sales 18.9 per cent compared to the same period in 2023, from 3939 to 4683 registrations.

“The expectation is that is the level [of sales] we would like to see going forward,” said McMahon.

“Last year we were hampered by stock availability, we had very limited stock in the first half of the year. In the back half, especially from December onwards, huge stock came through.

“If you look at the back half of January, February, March, we are getting back up to the levels we would expect our [sales] pace to be running at.”

Honda’s sales boost is mostly based on the addition of the ZR-V mid-size SUV and a small growth in sales of the HR-V compact SUV. The latest CR-V mid-size SUV remains its biggest seller but is down year-on-year – as is the Civic and Accord, which has just renewed in 11th-generation form Down Under.

Asked specifically about the CR-V’s downturn, McMahon pointed to limited stock during the run-out of the fourth generation in late 2023. But she also conceded that Honda needed to do a better job of raising awareness around the new model, which has garnered strong reviews and some awards.

“We can do more in telling the consumer about our product, telling the consumer about the value of the one price promise, the quality of our vehicles,” she admitted.

“We have been around globally for 75 years and in this country for 53 years. Our quality and reliability is second to none and maybe we have to do a better job of communicating that.”

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