Honda Australia has defended its decision to switch to fixed prices for new cars from 1 July 2021 – even though the Japanese brand forecasts the number of vehicles it sells will slashed by one third.
Discounts on recommended retail prices will not be granted "under any circumstances", according to Honda Australia general manager, Stephen Collins. The "non-negotiable" rule will extend to fleet sales and runout stock.
The radical overhaul comes as Honda – which has sold cars in Australia since the 1960s – moves to reduce the number of dealers nationwide from 106 last year to approximately 90. Some dealers will become service points only, rather than showrooms.
It means some buyers may need to travel further for routine maintenance, however the revised network is yet to be revealed.
Honda forecasts it will sell fewer new cars under the plan, from approximately 30,000 last year to 20,000 in the next full calendar year. However, Honda aims to make more profit from each sale.
James Voortman, CEO of the Australian Automotive Dealers Association (AADA), which has opposed the move, told CarAdvice: “We have serious concerns with the fixed-price model being proposed. Dealers often have many loyal customers who do appreciate the ability to get a discount on what is the second biggest purchase after the family home.”
“There is a reason that the highest number of new cars are sold in June, because it’s the period when discounting is at its peak during the end of financial year sales,” Mr Voortman said.
Honda has been selling new cars at fixed prices in New Zealand for more than 20 years. And German luxury car maker Mercedes-Benz plans to introduce fixed pricing in Australia from 1 January 2022.
Honda Australia says the fixed pricing business model is part of a plan to move the brand upmarket. For this reason there will be a new focus on mid- and upmarket variants, said Mr Collins.
The company says there will be a renewed emphasis on "customer experience". “Honda Australia’s customer experience is already great, but the new model will make it even better,” said Mr Collins said.
Under the plan, Honda will take ownership of all its new cars coming into Australia, which means dealers won't have the expense or responsibility of carrying millions of dollars worth of showroom stock.
Honda is yet to outline its revised national showroom network – or pinpoint their locations – however the company says rural dealerships will remain largely unchanged.
Honda claims its line-up of vehicles (from July 1) will not be culled, however analysis from industry experts suggests such a diverse range may not be viable within the structure of the new fixed-price business model.
Existing dealerships that have been retained by Honda will switch to the fixed pricing arrangements from 1 July 2021.