Honda committed to Australia despite lowest sales on record

Honda new-car sales in Australia have hit reverse since switching to non-negotiable, fixed prices. But the Japanese company says it remains committed to the controversial business model amid record low vehicle deliveries.

Honda Australia has again defended its move to non-negotiable fixed-prices for new cars – and reaffirmed its commitment to stay in Australia “for the next 50 years” – even though sales have dropped by 72 per cent over the past four years.

Honda Australia’s new boss, Carolyn McMahon, acknowledged the new business model has failed to stop the new-car sales slide in its first 18 months of operation, but says the company remains committed to stay the course. 

Honda’s new vehicle sales have fallen from 51,525 in 2018 to 14,215 vehicles reported as sold in 2022 and are down another 10 per cent so far this year.

The top Honda Australia executive blamed the sharp sales decline on stock restrictions caused by COVID-19 rather than a lack of customer demand – and claimed the downturn was not driven by buyer opposition to Honda’s no-haggle sales model.

“As the director in change of that transformation, we planned for everything except a pandemic … COVID-related supply is not allowing us to be where we want to be with the volume,” said Ms McMahon.

“Basically, the implementation went well. It was well planned. There has been some challenges because of the pandemic, but essentially we happy with where we’re at.”

Honda Australia set an all-time sales record of 60,529 in 2007, placing it seventh overall with a 5.8 per cent market share.

In recent years, Honda’s annual sales volume has been as high as 51,525 vehicles, in 2018.

In 2020 Honda’s volume had fallen more than 40 per cent to 29,040. In the first six months of 2021, Honda reported 10,771 new vehicles as sold in Australia. In the six months following the July 1 fixed-price sales model implementation, Honda sold 6791 vehicles.

In 2022 Honda’s annual sales volume fell further – to 14,215 – and so far in 2023 the Japanese brand is tracking 10 per cent down compared to the same period in 2022, placing Honda 19th overall.

For most of the past two decades in Australia, Honda has been a Top 10 automotive brand.

Ms McMahon said Honda Australia’s ongoing sales decline is not a result of weak consumer demand, but due to ongoing supply restrictions triggered by the COVID-19 pandemic. 

“Demand is where we thought it would be. We went into this [fixed-price business] model with [the goal of] 20,000 units. That was our strategic volume level. That’s where demand is, so that’s fantastic. 

“So it’s just volume challenges that everyone’s grappling with at the moment. We will flex up and down in terms of where we land at the moment.”

Honda confirmed wait times on a number of Honda models stretch beyond six months, and the queue for the soon-to-be-launched Honda Civic Type R performance hatchback is up to two years. 

“So [Civic] Type R as we’re all aware is out to a couple of years. HR-V petrol is out to mid this year, and HR-V hybrid is six to seven months. Civic Hybrid is out further to mid next year.“

Ms McMahon said this level of demand is proof the non-negotiable, fixed price business model is working. 

“We think the market has accepted the (new business) model. We think our dealers are happy with the model.”

At the time, Honda said the new sales structure model – which relegates dealers to retail agents selling stock owned by Honda – would be “a much more transparent and enjoyable way to buy a new car … no more haggling or shopping around. You’ll pay just one price … no matter which Honda Centre you visit.”

Ms McMahon said: “Over the past 18 months, we’ve surveyed over 22,000 customers. Seventy-five per cent of them advocate for the (non-negotiable) business model. That means they’re going to recommend us at the barbecue. And we get 82 per cent positive and neutral feedback on the ‘One Price Promise’.”

Ms McMahon is a 28-year veteran of Honda. In her first six months of leadership she has overseen a re-integration of Honda’s different motorised businesses – Honda Cars Australia, Honda Motorcycle and Power Equipment, and Honda Marine – after 30 years as separate operations.

All Honda business arms have also moved into the one corporate headquarters in the Melbourne suburb of Moonee Ponds.

Ms McMahon said these changes, and a new 22,000 square-metre national parts distribution centre opening in August 2023, were signs of Honda’s commitment to Australia.

“You know, when we’re getting into (the non-negotiable, fixed-price business model), there was lots of talk about whether or not we’re going to be here. Are we leaving the market? You know, that was a strategic move for us to be here for the next 50 years. 

“And I hope today, you know, this and our [new head office] demonstrates to you that we’re not going anywhere.”

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