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Honda Australia is months away from flicking the switch and changing over from the traditional dealership model to an agency-style structure on July 1, so here is what it means for new-car buyers.
The Japanese car brand will reduce its dealership footprint from around 107 to 95 outlets, but all of the retailers going forward won’t resemble a traditional showroom.
Instead, Honda is adopting a ‘hub and spoke’ approach to servicing its customer needs, redrawing the usual boundaries of ‘primary market areas (PMAs)’ and turning them int ‘areas of responsibility’ that will be serviced by a single dealership (the hub) and supported by other channels including shopping centre fronts and service centres (the spokes).
It is still to be determined what the mix of ‘hub’ and ‘spoke’ will be look like for the July 1 changeover date, but Honda promises that “physical representation … will be in line with the current network across key metropolitan, provincial and rural areas”.
The new business will be supported by three core models – the Civic, HR-V and CR-V – with added support from the Odyssey people mover, Accord mid-size sedan and Civic Type R hot hatch that is projected to net around 1650 sales per month, or around 20,000 annually.
While this will push the brand out of the top 10 and behind traditional rivals such as Subaru and Nissan – as well premium marques like Mercedes-Benz and BMW – this is all part of the plan, according to Honda Australia boss Stephen Collins, who told media that the new business will be supported by quality, not quantity.
“This is a very different business model and we’re coming from a base of around 40,000 units to 20,000 units and we’re currently on this glide down, but we believe that in terms of where our brand is, we want to be a bit more premium and we believe for all parties involved – customers, our partners and us – this is a sustainable model for the future,” he said.
“We have had and continue to have the 100 per cent continued support of Honda Motor.
“They understand the direction in which we’re going, and in many ways, it’s aligned – maybe not the halving of the volume – but it’s certainly aligned to pursuing more of a quality business over quantity.”
Going forward, all stock will also be owned by Honda Australia, and each model will have a set, no-haggle price.
Customers will still be able to trade-in old cars though, which will be handled by those ‘hub’ dealerships, who will also prepare the vehicle for handover to the customer.
So why the seismic shift in how it does business? Mr Collins said Honda looked at the changing automotive landscape and plotted a course that would allow the business to not only survive, but succeed going forward.
“We had a good hard look in the mirror and we wanted to not just put Band-Aid solutions on, we wanted to try and fundamentally fix some of the issues that we saw going forward,” he said.
“In the past, like nearly everyone, we were pushing for volume, whether we were in the top 10 or not was not a major factor for us, but we were pushing for volume.
“This is very much about looking at elevating the experience and also looking at what we saw as a sustainable model for us and our partners going forward.”
Mr Collins said the decision was not mandated by Honda Motor in Japan, but was “100 per cent a local decision” after looking at the success of other markets, like New Zealand, who already employee the agency model.
This change however, doesn’t mean Honda is looking to exit the Australian market, said Mr Collins, and that the brand is still “100 per cent committed”.
“I think in the automotive industry, the business model basically hasn’t changed for 70 years,” he said. “It would have to be one of the very few industries that hasn’t changed, and change is not easy.
“We’ve had a lot of tough discussions – with dealers particularly that aren’t going to be with us in the future and they’re tough – but we truly believe that the experience we’re going to deliver to our customers going forward will speak for itself.
“But change is not easy, and we’ve really tried to take a leadership position, and we’re 100 per cent confident it will not just succeed but it will really set a benchmark.”