Honda defends agency sales model

HONDA Australia says its recent decision to become the first OEM in the country to introduce a factory-led agency model for a streamlined, premium-focused model portfolio is about giving customers a better new-car buying experience while reducing its operational outgoings, and not about “chasing volume or market share”.

Four months into its new business strategy, Honda Australia says the consolidated dealership network and no-haggle ‘promise’ on new-car pricing is working well against satisfaction surveys conducted both externally and in-house, a key driver in measuring the success of its fledgling agency model being the ability for customers to more easily and more quickly find the vehicle they want.

Speaking to GoAuto at the unveiling of the new Civic hatch this week, Honda Australia director Stephen Collins said the transformation of the business was on the right trajectory, and that customer response to the agency model was increasingly positive.

“It’s a massive transformation for us, and the first questions I often get are ‘why did we do this?’ or ‘where did this come from?’. What we really identified was that we wanted to elevate the experience of our customers, so introducing this agency model is one part of our business going forward,” Mr Collins said.

“It’s about the experience, the one-price promise, and taking the haggle out of the new car (buying) experience. We’re really pleased with the feedback we are getting … but the agency model is also about the transformation of the business, and the resizing of the business.”

Mr Collins reiterated the fact that under the program, Honda’s total volume in Australia would be wound back to approximately 20,000 unit sales per annum.

He said the decision to focus on customer satisfaction and a “more premium product” is one that will dispense with the need to use sales volume alone as a barometer for success. 

“Going forward, over the next few years, our business will be around 20,000 units (per annum). It’s about going more upmarket in the product offering … and we’ve done an enormous amount of work over the past 12 to 18 months to really bring this new experience to life,” he said.

“Going from a franchise model to an agency model meant we were not able to carry over one unit from one to another, so we went into July absolutely starting from scratch. (But) we’re really pleased with the progress, and we’re on the trajectory we need to be on in terms of our volume.”

The streamlining of its model portfolio will obviously take some time. Early numbers show Honda Australia will exceed its sales expectations if the status quo is maintained, but Mr Collins said upcoming generational changes of its passenger car and SUV ranges to target what he calls “premium private buyers” will see a levelling out of the marque’s projected targets.

“This month we’ll do about 1600 fresh orders through our network … and we’re continuing to make sure that we don’t just deliver the experience to our customers, but of course that we are consistently at that 20,000 (annual unit) pace,” Mr Collins added.

“Supply is pretty good. We will have some semiconductor (related) issues, and we had some horrendous supply issues in the first half of the year where stock literally ran out in June. But for the next couple of months, it’s pretty good … CR-V and HR-V availability is particularly good.”

Mr Collins said that Honda Australia would adhere to its plans of offering only high-grade models locally and that it would not remove equipment from vehicles to meet volume targets or delivery times.

“We have no plans to take any equipment from our vehicles to meet supply. We’re really looking to high-spec our models coming through, and a part of this new business is for us not to play in entry grades. We’re not chasing volume or market share; volume and share is not our primary KPI,” he emphasised, hinting that Honda’s agency model may be one that other importers will study quite closely.

“To be honest, I think it’s a major shift for the industry – and it’s also been a major shift in our mindset, that volume is not our pay driver … it’s primarily about sourcing the products that we need with the right spec – and the jigsaw is coming together really well and is starting to get good momentum,” he concluded.