Honda’s July sales hit by agency model change

Honda Australia's sales are down almost 40 per cent year-to-date, with the company pointing to its new fixed-price model and follow-on consequences from COVID-19 as significant factors.

Last month the Japanese marque sold just 822 cars compared to 2199 in the same month last year – and not one of those was of its Accord sedan. Its normally popular CR-V was also down, achieving 241 sales versus 832 in July 2020.

So far in 2021 it has shifted 11,593 units, down 38.1 per cent compared to a Covid-hit 2020 when it sold 18,728 year-to-date.

However, Honda says it was expecting the sales dip, putting the loss down, in part, to a change in its business model in Australia.

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Starting from July 1, Honda shifted to an ‘agency’ model for its dealerships, whereby the company now offers a fixed price for each model across the country – a move it says is “simpler and more transparent…to remove some of the pressures and anxiety sometimes associated with the sales process”.

Honda also has centralised control of its stock, now owning all the cars at its retailers rather than dealerships acting as a ‘middle-person’ in the supply chain. This, Honda claims, means customer orders can be more easily met – rather than dealers needing to potentially bargain with others to find stock quickly.

Further simplification comes in the form of a stripped back product range in Australia, with the Jazz and City gone – making way for focus on the CR-V, HR-V and Civic. The Odyssey, Accord and Civic Type R remain as low-unit models.

Honda is also now focusing more on higher-spec cars, with some previous base models gone.

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In March 2020, the carmaker said it expected this entire process to “gradually lower sales volumes.”

“The impacts that Covid-19 will have on the whole industry are not yet known, but at this point in time we expect the monthly Honda volume from mid-2021 to be about 1650 cars per month,” it said at the time.

Of course, Honda couldn’t have predicted the damage the pandemic is still having almost 18 months later, nor the subsequent semi-conductor shortage, both of which have impacted the marque as well as its competitors.

Wheels understands Honda expects to see its sales volume grow through the rest of the year as the new fixed-price model beds in. Prior to the changeover in July, it recorded 1403 sales in May 2021.