Honda Australia 'expecting success' from new sales model – hoping for 20k units by year's end

Honda Australia says it is pleased with how its switch to a new fixed-price sales model is going so far, claiming it’s not chasing big numbers after a couple of low volume months.

Although data to prove its success is not yet available, company execs say “we are really pleased with the progress so far and it’s only eight weeks in”.

Starting from July 1, Honda shifted to an ‘agency’ model for its dealerships, whereby the company now offers a fixed price for each model across the country – a move it says is “simpler and more transparent…to remove some of the pressures and anxiety sometimes associated with the sales process”.

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However in July sales were down, with the Japanese marque selling just 822 cars compared to 2199 in the same month last year – and not one of those was of its Accord sedan. Its normally popular CR-V was also down, achieving 241 sales versus 832 in July 2020.

However, Honda says it was expecting the sales dip, putting the loss down, in part, to a change in its business model in Australia – as well as impacts attributed to the pandemic.

Speaking to Wheels, Director Stephen Collins said that following the agency model changeover, Honda is “no longer about chasing volume, it is quite different to the past”.

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“This change has been 15 months in the planning. Everything went new from July 1, we’ve got all new systems as well as the fixed-price model and servicing,” he said.

“Four or five years ago we were chasing 40,000-50,000 sales a year but this business is now about having a line-up that is really well specced and provides an industry-leading experience on things like purchasing and ownership.”

The boss said the carmaker is now aiming to achieve 20,000 sales annually and believes it is on track to get there by the end of 2021.

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Honda Australia's sales are down almost 40 per cent year-to-date. So far in 2021 it has shifted 11,593 units, down 38.1 per cent compared to a COVID-hit 2020 when it sold 18,728 year-to-date.

“We’re geared for the future and that means 20,000 sales a year and we’re on track to get there. We’re in a transition period now,” Collins added.

“For us it is about achieving an experience rather than volume, our measure for success isn’t just the sales numbers from VFACTS – whether we’re number one or number two in the charts – our core metric is customer data, which we will have in the months to come.

“Chasing volume through the agency model is not where we want to be as a brand.”

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Collins expects August’s figures to reveal another drop, similar to July with around 1000 sales, but is “confident over the next few months we will get back to the pace we want to be at”.

“The first half of the year we were very badly hit by semi-conductor shortages, but are now finding the availability improving – although we’re not quite out of the woods yet,” he said.

“The decision to change to this model was ours in Australia, it was not an order coming down from Japan, we looked at how we could improve buying a car which hasn’t fundamentally changed in many decades, we had two choices, accept the status quo or look at what customers want and do that.”

Further simplification comes in the form of a stripped back product range in Australia, with the Jazz and City gone – making way for focus on the CR-V, HR-V and Civic. The Odyssey, Accord and Civic Type R remain as low-unit models.

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Honda is also now focusing more on higher-spec cars, with some previous base models gone. The majority of these more premium offerings will be increasingly sourced from production in Japan rather than Thailand, as has previously been the case, as the brand looks to go more upmarket.

Additionally the marque has recently announced it will be moving from its current headquarters operating out of Sharps Road in Tullamarine, and will be heading under the same roof as the Campbellfield-based Honda Motorcycles and Power Equipment division at a yet to be revealed location – although it is likely to remain on the north side of the city.

According to Collins, the current large property is at the end of its life and the company has decided to invest in new facilities for the first time in 30 years.