Honda Australia is ‘comfortable’ with its agency sales model, despite lower sales and legal action from former dealers.
The Japanese brand introduced the sales model in Australia in 2021, and faced heavy criticism from dealers, customers and automotive bodies.
It also posted its two worst annual sales results on record in Australia in 2022 and 2023.
Despite lower sales – and a ruling from the Victorian Supreme Court against Honda Australia, ordering it to pay $13.6 million in damages after cancelling a Melbourne dealer’s contract to introduce the agency model – the automaker says it has no plans to ditch the model.
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“When we look at our customer feedback, a lot of customer feedback suggests that they appreciate the fact that it’s just clear, simple and transparent,” said Honda Australia managing director Rob Thorp.
The agency model set new-vehicle prices nationally, meaning customers pay a set price with no negotiation or bargaining apart from the value of a trade-in, if there is one.
Honda said the model would also see it sell fewer cars, which then director Stephen Collins – now at BYD Australia – said the company was willing to accept.
Despite facing its best result since the agency model was introduced – with 16,136 sales projected this year – the automaker is still short of the forecast 18,000 target it set when the model was announced.
Yet Mr Thorp said there won’t be a move away from the agency model.
“We’re very comfortable with the business model,” said Mr Thorp. “Like anybody, we’re always open to a review or optimisation – we’ll continue to work on it, but the fundamental premise we’ve had, and One Price Promise [servicing plan] in market [comes] with a clear value proposition.”
The plan was criticised as forcing higher prices onto buyers, while dealers lost autonomy when it came to profit margins, with a lack of discounting making it potentially harder to offload slower-selling models.
It also saw the typical practice of franchise dealers buying the cars in showrooms before selling them to customers scrapped, with Honda Australia owning all stock instead.
Honda Australia has 87 dealers, down from around 100 before the agency model was introduced, which Mr Thorp said the company is happy with.
“We changed the ownership model and we changed a few key footprints and locations, but it’s still quite wide and diverse – dealers, we want them to be happy, too.”
