IT’S A TOUGH TIME for everybody, not least car dealers. Just weeks before announcing that it is looking at downsizing its dealer network, Honda revealed the winners of its third National Dream Awards.
The actual number of dealers to be culled (if we can use such an emotive word) is yet to be announced but it will be a significant reduction. Honda Australia denied that the number of showrooms would be reduced to around a dozen, but did confirm that the “number of owners will be reduced”.
Currently, there are 105 Honda dealers across the nation, and they achieved sales last year of just under 44,000 between them.
The new business model sees dealers being converted into “haggle-free” zones with a fixed pricing structure on all models from July 2021.
The company has also announced that it will eliminate under-performing models and centrally hold all stock nationally. Effectively, customers will find themselves dealing with the company and Honda dealerships being little more than display rooms and vehicle collection points.
The Honda models that are most likely to survive are the Civic, HR-V small SUV and CR-V medium SUV. Should they continue to be sold, the Odyssey people mover, Accord medium sedan and Civic Type R hot hatch will be niche market models. What happens to the NSX Supercar is anybody’s guess, but since they only sold three last year, it probably won’t be seen again. The Jazz hatch and City sedan will be withdrawn from the market.
The reasons for the changes, according to Honda, are 23 consecutive months of slowing new car sales (a situation hardly likely to improve in light of the Coronavirus pandemic), currency pressures and the competitive nature of the Australian market.
It will be interesting to see what, if any, compensation is offered to dealers, all of whom have made substantial investments in their businesses.