Japanese car maker Honda will not leave Australia but it will introduce a fixed price “one price everywhere” sales model, reduce the choice of cars it sells, and scale back the number of showrooms.
However, Honda Australia says reports that the dealer network will be slashed from 105 showrooms to about a dozen nationally are "not accurate" and the number of sites "is not expected to materially change, but the number of owners will be reduced".
In a statement issued by Honda Australia today, the company announced the new no-haggle sales model would be introduced from July 2021, 15 months from now. In the meantime, the current Honda network will remain “business as usual”.
The company says it has adopted this new fixed price sales model after struggling to make a profit following 23 months in a row of market slowdown in Australia.
The statement from Honda blamed currency pressures and the competitiveness of the Australian new-car market, factors which crippled our local automotive manufacturing industry and brought local assembly to a close in 2016 (Ford) and 2017 (Toyota and Holden).
Honda says it is too early to speculate how many dealers will remain after 2021, but it plans to maintain major showrooms with regional car delivery points in a “hub and spoke” business model.
“As Honda is still in the process of consulting with dealers, the final number has not been determined, but the restructure will take place in a gradual and respectful way over the next 15 months to allow the current dealer network prepare for the new business model,” the statement from Honda said.
“We can’t sit still,” said Stephen Collins, Director, Honda Australia, in a separate prepared media statement. “The Australian market has seen 23 consecutive months of decline and every automotive business is rapidly changing. Customer preferences are changing and other industries have evolved while the automotive industry still uses a model that is decades old.”
“Honda Australia has just celebrated its 50-year anniversary; now is the time to take the necessary steps to seek to ensure the business and network are set up for the future and that our customers are with us for the next 50 years,” said Mr Collins.
Honda will also manage and hold all new cars arriving into Australia, and distribute each vehicle on a first come, first served basis.
The prices will be non-negotiable and dealers will, in effect, became display showrooms and vehicle handover points.
Honda has forecast its annual sales will be cut by more than half and drop from 43,800 last year and 51,500 the year prior, to less than 20,000 deliveries a year under the new plan.
Honda already sources most of its vehicles from Thailand, one of the lowest cost manufacturing sources for the company. But it also imports some models from the UK, USA and Japan.
The Honda statement said: “The business is reviewing its product sourcing to be more in line with our product line-up and business realities.”
This has been interpreted as Honda Australia adopting a greater reliance on models made in Thailand, as it has done for two decades.
CarAdvice has contacted dealers and Honda Australia for further comment on the changes. We will update this story as new information becomes available.
A number of dealers told CarAdvice that, from July 2021, there may be only three dealers in Victoria and five in NSW – and no more than a dozen nationally – however Honda Australia insists these dramatically reduced numbers are untrue.
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