Market Insight: The ‘joy’ of selling Hondas

HONDA Australia has now been operating under its fixed-price agency distribution model for just over two years, long enough to gauge a measure on the satisfaction index of both customers and dealers alike – and according to head office, the news is very positive indeed.

With Honda’s stated goal of annual sales reaching 20,000 to 25,000 units now forecast to occur over the next 12 months, the importer is still a long way behind the 51,000 units it sold back in 2018.

So far this year, Honda sales are down 10.3 per cent compared with the first nine months of 2022 – mostly due to a sharp drop in HR-V small SUV deliveries and deletion of the Odyssey people mover – putting the brand on track to sell even fewer vehicles in 2023 than the 14,215 vehicles it did the year prior.

Speaking to GoAuto at the recent Australian launch of the sixth-generation CR-V, Honda Australia managing director Carolyn McMahon said that not only is head office pleased with the performance of the agency transition, but customers and dealers are “happier” with the model, noting that the clarity and convenience of the sales transaction is improving the mood of all involved.

“While we always knew that there would be a core group of customers who love to haggle and for whom this model probably wouldn’t work, the majority of customers – in fact, far more than we anticipated – have told us that the agency model has returned the joy of buying a new car,” she explained.

If Honda and its remaining dealers – it axed around half its Australian retail network as part of the agency transition – can maintain profitability at the 20,000-25,000 annual deliveries the importer is aiming for, happier times lay ahead for all concerned.

“That is immensely important to us. Honda’s three ‘joys’ are the joy of selling, the joy of buying and the joy of creating, and the joy of buying was really behind the design of creating our one-price policy,” said Ms McMahon.

“We wanted our customers to find the buying experience an easier, happier, more seamless, and a ‘non-pressure’ kind of experience.”

Honda Australia introduced its ‘One Price Promise’ policy in the third quarter of 2021, marking a radical change in the way buyers purchased and dealers sold cars.

Dealerships now essentially sell Honda vehicles on consignment to head office under a national, fixed drive-away price. The model gives customers greater transaction clarity while negating the need to cross-shop between dealers representing the same brand or haggle with the salesperson.

While the model might seem to only benefit the customer, Ms McMahon claimed Honda dealership sales staff are also benefiting from the switch, with the overwhelming majority reporting a more positive experience on the showroom floor.

“When I visit our Honda Centres and talk to our salespeople, overwhelmingly they tell me that they love it. It has allowed them to focus more on the customer and the needs of the customer, instead of solely on the price,” she said.

“Now, the sales experience is completely in the customer’s hands. When a customer comes in the door, they can spend an hour with the salesperson and have a real conversation.

“They can really listen and talk to them about their choices, rather than pushing them into a particular model, or grade, or perhaps something that they just have excess stock of and have to move.”

From Honda’s standpoint, Ms McMahon told GoAuto that the renewed clarity of the sales process will also result in customers being better versed in the detail of the ownership experience.

“As the stock and supply situation improves, this coming year will be the first that we’ve been able to operate the agency distribution model at that full 20,000 unit or more capacity,” she said.

“I think that will allow us to spend even more time explaining to customers not only the value behind the model, and how it is different to the traditional sale experience, but also the benefits of lower ongoing ownership costs through programs like our guaranteed five $199 services.

“There were lots of question marks around agency because we weren’t doing the volumes that were traditionally expected. But that has stopped. It (the agency distribution model) has helped us into a really good place at a really good time.

“We have got the product right, we have got the pricing right, and we have got the experience right. Our Honda Centre staff are excited and confident about the position we’re in, and I can tell you that there is even more to come.”