Sweeping changes will see Honda sell cars directly to the public in future.
Staff will be cut and some dealerships will be shut, while the remainder will be relegated to delivery, servicing and parts, in a major overhaul of the company’s operations in Australia.
The shock move comes in a market that has seen almost two years of decline, with sales continuing to fall — month in, month out.
It’s not sustainable and Honda had reportedly become unprofitable in the Australian market.
Honda’s managing director Stephen Collins said the changes had nothing to do with the current Caronavirus pandemic.
The restructure had been planned long before the virus.
“We can’t sit still,” Mr Collins said.
“The Australian market has seen 23 consecutive months of decline and every automotive business is rapidly changing.”
Mr Collins said the company will shift to a new “agency-style” business model, with fixed pricing and a haggle-free buying process.
Customers were sick of haggling with dealers, he said.
Mr Collins said customer experience would be prioritised over sales numbers under the new system.
The product range and dealer network would be rationalised, to better respond to market realities and evolving customer preferences.
Honda currently has more than 100 dealers around Australia.
That figure could reportedly be halved, with the number of dealers cut from 12 to just four in the Sydney metropolitan area.
“Customer preferences are changing and other industries have evolved while the automotive industry still uses a model that is decades old,” Mr Collins said.
“We have excellent customer retention and want to reward our loyal and highly valued customer base with a more relational and less transactional experience.
“We know our customers want good value, strong resale value and a seamless ownership experience on top of reliable engineering and quality vehicles.”
He said the new business model will deliver transparency of price and consistency of experience, no matter which Honda dealer customers visit.
“The transition over the next 15 months will be a gradual process to allow our dealer network to fully prepare for the new business model.
“Honda Australia has just celebrated its 50-year anniversary; now is the time to take the necessary steps to seek to ensure the business and network are set up for the future and that our customers are with us for the next 50 years,” Mr Collins said.
The move comes on the heels of General Motors’ shock decision to kill off the Holden brand as well as the end of local production for the Ford, Holden and Toyota brands since 2016.
Honda says the changes will be introduced from July 1 next year, giving plenty of time to make the transition.
CHECKOUT: Honda CR-V: Room for two more
CHECKOUT: Honda Civic: The ‘eyes’ have it