Stephen Collins

AUSTRALIAN Honda dealers are set for a big payday in 2017 as Honda Australia prepares for an eye-opening 20 per cent growth spurt in 2017 through its existing network.

While the projected sales surge is welcome news, it will however, compound the congestion currently bedevilling dealers as a result of the Takata airbags recall, which has choked service bays and forced dealers to extend hours, even on Saturdays.

A product-led surge in activity will push national sales back up towards the levels seen in the halcyon days before the Global Financial Crisis (GFC), when Honda peaked at 60,529 vehicles in 2007. Since then, sales have dipped as low as 30,107 in 2011.

The good news for dealers is that Honda is not planning to increase the dealer network to cope with the expected surge in sales. When asked how many new franchises would be granted, Honda Australia director Stephen Collins was succinct and said “none”.

Mr Collins was conducting a roundtable discussion with journalists at Scott’s Honda dealership in Sydney and he confirmed that Honda dealers could be looking at a 25 per cent increase in volumes in 2017.

“This (dealership) is a good example,” he said.

“This dealership can sell more than the 80 or 90 cars it sells each month. Our network can easily handle 50,000 cars.”

Mr Collins said sales in the second half of 2016 will be stronger than the first, and he is confident the company will reach its target of 40,000, in line with 2015.

The main factor behind the strong finish to the year is the June launch of the 10th-generation Civic sedan, while the bullish outlook for 2017 is based on the scheduled arrival of the Civic hatch “early next year”.

“Next year is a very important year for us,” he said.

“We really consolidated in the last two years at 40,000 units. Our plan remains to go to 50,000 next year.

“It’s big growth in what will be a relatively flat market, but that growth will be primarily on the back of new Civic, particularly the hatch.

“I don’t think there’s been a period in our history when we have been strong in both (Civic) sedan and hatch, both at the same time, so we expect that that, on top of the new CR-V and the opportunities that will provide, will get us to new levels.”

Honda Civic

Although Mr Collins was confident Honda dealers would be able to handle the extra sales, he admitted they did have a capacity problem. But that problem is in the back of the dealership at the service department.

“In terms of capacity, probably the biggest challenge for us has been the recalls in recent times,” he said.

Meanwhile, Mr Collins said the awarding of excellence status to four dealers in 2015 did not mean the dealer network had gone backwards from two or three years ago when Honda recognised 10 excellent dealers.

“It ebbs and flows,” he said. “At the end of the day, excellence is a pretty small percentage of anything. I think somewhere between that number and 10 is about right.”

He stressed that the standards needed to achieve an excellence rating were a moving target.

“We make it harder,” Mr Collins said. “We don’t make it any easier, we up the bar. That’s what it’s all about, rewarding those who do the very best and that’s what the program does.

“We might, corporately, have a great year but still only have five or six (excellence awards), because it is across the entire business. You might be a superstar in selling cars, but if you are not really great at customer service or finance penetration and all these other factors, then you fall out. It’s bloody hard to get.”

Honda Civic

He was asked about dealers at the other end of the scale.

“I don’t know what the opposite of excellence is,” he said. “I think we are like every other network.

“We have a bunch of dealers who do a great job. We have some dealers who struggle.

“I wouldn’t want to quote numbers, but we have a great bunch of dealers who have stuck through thick and a bit of thin in recent years and I think that they do a great job, generally speaking.

“We don’t have a big stick approach, I wouldn’t say. I think we work very collaboratively with our dealers and if you spoke to most of our dealer principals … I think they would say we really work closely with our dealers to improve not just the business but the customer experience and what we deliver at the end of the day to the customer who is handing over their hard cash.”

Stephen Collins

How dealers are coping with Takata recall

HONDA Australia’s dealers are about half way through the mammoth 400,000 airbag replacement program they have to undertake in the fallout from the Takata airbag scandal.

Honda Australia director Stephen Collins said there are 400,000 affected vehicles in Australia and that this has put significant strain on dealer workshops.

“We have been repairing up to 5000 (airbag) inflators per week, which – if you divide that by 100 dealers – that’s a lot of recall work,” he said.

“It sort of ebbs and flows, but that’s been our high point.

“In terms of capacity, that’s been tough but, again, I think we have worked very closely with our dealers in expanding operating hours, getting more technicians and all the things that need to happen to get those cars fixed.

“At this stage I think we have got just over 400,000 vehicles that are affected and we’ve repaired over half of them and we are hoping to increase the rate in the second half of the year as parts availability improves.”

He said it could take a further 12 months to get the program substantially completed.

“That’s a combination of parts supply – and that is improving – and it’s also a case of getting people back into the dealerships,” he said.

“I do think the Australian way is to be a bit laid-back about these things. There are customers who probably get letters about all sorts of things in their letter boxes and they might not open them or take them as seriously as they should.

“We have set up a dedicated call centre to handle all this. We did that because we wanted customers to be able to call a central point and to be able to make an appointment with a dealer and if that particular dealer happened to be full that day then they could go to a different dealer.

“My mantra is to fix every car.”

Mr Collins said dealers were making a special effort to get the job done.

“We have done about 200,000 inflators so far and are doing around 5000 a week in the peak periods,” he said.

“So that’s how many we can get through the service bays when we extend to Saturdays. With 107 dealers, we want to make sure we max out what is available.”

He said there had been periodic parts shortages that have held up the program. There is heavy demand in many other markets as it is a global recall.

“I think parts supply has improved, but I think overall we have about a dozen airbag recalls, so it’s not all one part. There are many, many different parts that come for different cars,” Mr Collins said.

By Ian Porter