Honda could have left Australia without switch to fixed prices – executive
Honda says it is here to stay in Australia with non-negotiable prices, despite falling short of its sales projections.
Honda has reiterated its commitment to the Australian market after recording its lowest annual sales on record – and falling short of its target of 20,000 deliveries under its new fixed-prce new-car sales model.
Last year Honda reported 13,734 cars as sold in Australia, down on the previous year – making for its lowest annual result since records began to be kept in the 1990s – and far below its target of 20,000 set when it adopted fixed prices for new cars three years ago.
But despite lagging behind sales projections, Honda Australia says without a switch to the controversial fixed-price sales structure in 2021 – known as the 'agency' model – the brand might not have survived in Australia.
Honda Australia director Carolyn McMahon told a media briefing: “One of the reasons we changed our business model, was really because if we didn't, the survival of the franchise was under a big question mark.”
Nearly three years after the switch to fixed-price sales, where Honda Australia head office – rather than dealers – owns new-car sales stock and showrooms are paid a fee to sell them to customers, Honda says it is happy with its current strategy and says the 'agency' model works well.
The boss of Honda Australia said showrooms – known as Honda Centres – are “loving” the new fixed-price sales model, especially with "interest rate increases [and] floor plan costs [related to the stock on regular showroom floors]" being faced by conventional new-car dealers.
Asked about last year’s sales performance, Ms McMahon has blamed a lack of stock.
“We had very limited stock in the first half of [2023]. In the back half, particularly from December onwards, huge stock came through.”
In the first three months of 2024, Honda’s sales were up to 4683 cars, or 19 per cent year on year, which Ms McMahon indicated was the pace the brand intended to keep throughout the year.
“If you look at the back half of January, February, March, we're getting back up to the levels that we would be expecting our pace to be running at,” Ms McMahon said.
“Basically if we can keep the pace that we saw in February [and] March, we'd be happy with that."
Previously a staple of the Top 10 selling new-car brands in Australia, Honda's aspirations no longer lie in being among the best-performing brands locally.
“Being in the Top 10 volume is not something that is in our plan, Ms MaMahon said.
"We took a leadership position in the industry to consolidate the business, to right some of that business, and to put us in a more sustainable position from here. We've done that.
"It was really tough, obviously with COVID and the lack of supply, it hampered our ability to get to the bottom of what we had originally looked to be at.
"There's lots of commentary around, 'Honda's fallen off a cliff.' Honda's still here. We're not going away. We want to make sure that we are here for the future. And we will, step by step, just get this model working now."
