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Honda culls dealers, models

Annual sales to drop below 20,000 as Honda downsizes with agency model in Australia

24 Mar 2020

HONDA Australia has announced that it expects its annual sales to plummet to less than half of its 2019 volume by 2021 as the company moves to an agency sales model and smaller franchised dealer network.


Along with the reduction of its dealer network, the Japanese brand will also streamline its range of product offerings that will see the Jazz light hatch and City light sedan dropped from the range.


According to Honda, the rationalisation of its line-up and the economic impact of the COVID-19 virus are expected to contribute to the brand selling around 1650 cars per month from mid-2021, which would result in a yearly figure of 19,800 vehicles.


The revised figure would represent less than half of the sales volume the brand currently achieves, with Honda selling 43,868 units in 2019, down from 51,525 across the previous 12 months.


Its best year in Australia came in 2007 when it managed 60,529 local sales, while its 2021 prediction would mark the first time this century that the brand could drop below 20,000 sales in this market.


As part of its product restructure, the company said the majority of its sales will come from its three core models – the CR-V medium SUV, HR-V small SUV and Civic small car, which together made up 82 per cent of overall Honda volume in 2019 with more than 36,000 units sold.


The three sales pillars will be supported by the Accord medium sedan and Odyssey people-mover, which contributed 1861 units last year.


The hi-po Civic Type R hatch will remain, however no mention of the $420,000 NSX hybrid supercar in Honda’s future plans suggests the slow-selling coupe might be facing its last days in Australian dealerships.


As for the Jazz and City that are now rolling into retirement, the Jazz contributed 5263 sales last year while the City managed 669 new registrations.


The City will be retired over the course of this year, while potential Jazz buyers will have until early 2021 if they want to secure one of the last of Honda’s pint-sized hatchbacks.


Along with the reduction in models, Honda Australia will restructure its range with an emphasis on reduced variant choice, with only higher-level variants to be retained.


In line with commitments made earlier, hybridisation will also become more prominent in the Honda line-up, with a hybrid model to be introduced every time a new-generation model change occurs.


The change in the Australian product line-up will also be influenced by product sourcing, with the company to review its importing to better suit the line-up and what it refers to as “business realities”.


Honda Australia currently sources vehicles from the UK, US, Thailand and Japan, suggesting that those “business realities” will see a greater range of product sourced from the more affordable Japanese and Thai markets, along with the UK-built Civic Type R.


The predicted fall in sales comes as Honda looks to improve the quality of experience for the customer, with volume “no longer the priority” under the new agency business model.


Honda intends to reduce its dealer network starting July 2021, mirroring the set-up seen in New Zealand with franchised dealers and an agency sales model in an effort to combat tough local sales conditions.


Honda Australia is yet to divulge exactly how many dealers will be culled from its current network, however the company says metropolitan dealers will cover larger regions as part of a ‘hub-and-spoke’ style of network.


It added that it will be “substantially maintaining the same number of sites” to not affect customer convenience.


Moving to an agency sales model is designed in theory to provide an easier ownership experience, better resale values and more transparent new-car pricing.


Honda Australia director Stephen Collins said in a statement that the move to an agency model was required to reflect current trading conditions and changing buyer expectations.


“Customer preferences are changing and other industries have evolved while the automotive industry still uses a model that is decades old,” he said.


“We have excellent customer retention and want to reward our loyal and highly valued customer base with a more relational and less transactional experience.


“We know our customers want good value, strong resale value and a seamless ownership experience on top of reliable engineering and quality vehicles.”


Through the first two months of 2020, Honda has sold 6958 units, down 12.0 per cent on the 7907 managed to the same point last year.

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