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Honda believes agency growing pains are behind it, but Japanese brand still way off annual sales target

Honda Australia's best-selling model this year so far has been the CR-V, notching 2478 new registrations after four months.

Honda Australia’s move to an agency sales model has not been smooth, the brand admits, but the Japanese marque believes the teething pains of reinventing the way it sells cars Down Under are behind them.

When Honda announced it would change the way it does business back in early 2020, it also revealed plans to scale back its volume from a high of 51,525 sales in 2018 to around 20,000 units per year – a figure it is in danger of not hitting after averaging just 1290 sales per month after the first four months of trading in 2022.

Speaking to CarsGuide however, Honda Australia boss Stephen Collins said the VFACTS sales data does not paint the full picture, and that the brand is settling into its new normal after the switchover in mid-2021.

“VFACTS is, right now, for a whole host of supply issues, is not a great reflection of what’s happening in terms of demand,” he said.

“The reality is, in the last couple of months, the contracts that we’re writing is at 20,000 pace.

“For a whole host of supply-related issues that everyone’s got, we’re going to take some time to catch that (orders, delivers and customer handovers) up.

“It’s true that – we launched agency in July last year, and July, August, September was a tough quarter for a whole host of reasons including lockdowns and weren’t at the pace.

“We are confident, particularly with the line-up we have here, and the current booking pace, that that’s where we are and that’s still the forecast and its still our forecast over the next couple of years.”

As part of the changeover to the new sales model, all stock will now be owned and held by Honda Australia, while all wearing one standardised, driveaway price across the country.

Dealers will still be utilised for delivery and handover of vehicles, as well as aftersales support, trade ins and servicing, but Honda Australia has reduced its retail footprint since the agency switch.

Honda has also shrunk its product line-up to suit, including the discontinuation of the Jazz, City and Odyssey, while refocusing its efforts on the Civic, Accord, CR-V and HR-V – which have (or will have) less variants on offer to reduce complication.

The strategy to offer fewer, higher-spec grades and push into more premium territory has also come under fire, as Honda abandons the cheap and cheerful end of the market much in the same way Mazda, Volkswagen and even Toyota have done in recent years.

However, Mr Collins said he believes the agency model is the right way forward for the brand, and is designed to deliver a better customer experience overall.

“We want to focus our business on SUVs, more premium and – probably at the top of the tree – is just improving the experience of customers, and that’s why we switched to the agency model because we looked back and said ‘well for the last 70 years, the industry’s pretty much been the same’,” he said.

“It doesn’t mean it’s bad, but we just want to elevate that experience.

“The next 12 months for us, now that we’ve stabilised agency, is all about freshening the line-up.

“This [HR-V] is the start … Civic hybrid, Type R and then SUVs beyond that, so that’s our real focus over the next 12 months is to freshen up everything and deliver that ‘premium-ness’ to our dealers and our customers.”

The brand will roll out a new SUV to slot in between the HR-V and CR-V, expected to be called ZR-V, while a new-gen CR-V is also to likely break cover in the near future, with these three crossovers expected to now make up the bulk of Honda’s sales.

“We expect of that 20,000 – and there will be ups and downs – that HR-V will make up about 5000 of that,” Mr Collins said.

“But if you take the SUV collective, once we get the full range on sale, we think that [SUV] will be around 90 per cent of volume.

“But we’re still committed to Civic Type R and Civic hatch and Accord, although its small volume, but the core of the business will be those SUVs.”