HONDA’S new beginning as an agency brand has had a very public debut with sales slumping 62.6 per cent in July compared with the same month in 2020, during the height of the COVID-19 pandemic.

The brand sold 822 units in July compared to the 2199 vehicles it sold in July 2020. Overall the car and SUV sector rose 8.3 per cent in July 2021.

The slump appears to be concentrated in the capital cities where most of the sacked Honda dealers closed their doors on June, 30 but the remaining agents have so far failed to cover sales across these vast abandoned territories.

One east coast capital city agent reported to GoAutoNews Premium that he sold just two new Hondas in July.

Honda, which was losing sacked dealers from January 1 this year, has sold 11,593 cars and SUVs in the seven months of 2021, down 38.1 per cent on the same period last year, while the passenger car and SUV market recorded a 19.6 per cent rise. This put Honda 58 per cent behind the market.

But Honda says it’s not all as it seems. It said much of the sales retraction was expected and forecast as early as 15 months ago when the company decided to embark on the agency sales model.

Honda Australia director Stephen Collins told GoAutoNews Premium that the Vfacts sales figure was “a very small part of the storey”.

“We’re pleased that the new model has been adopted and all our programs worked and that we have been fully supported by our dealers,” he said.

“Sales were affected by other factors not related to the introduction of our new way of providing customers with the best experience and one-price model.

“We had no carryover from June to July, so we started our sales from July 1 from zero. Because of this, customers received their cars in the second or third week of July, so effectively we lost most of July.

“But we have more than 1000 confirmed orders in July which will now carry over into August, so we will record much better sales in August and better again in September.”

The sales data is also affected by Honda announcing late last year that it had reduced the number of vehicles it imports into Australia. This was aimed at controlling the volume of cars on the ground and maximising returns for dealers.

Mr Collins said in the plans unveiled last year, annual sales were planned to be 19,000-20,000 in an agency system, down from about 43,000 in 2019. But the sales in July indicate an annual sales rate of around only 10,000 units – half the number forecast 15 months ago.

The timing was not great for the brand as it had ended stock of the Jazz, City and Civic sedan. It also had diminished stock of the Civic hatch as the variant was running out pending the new-generation model. At the same time, Honda Australia had declined to import the new-gen Civic sedan.

Mr Collins said the bulk of sales are in the SUVs – CR-V and HR-V – but said future product would rebuild the range.

The company said the disruptions with availability of models came on top of COVID-related lockdowns and restrictions in parts of Sydney and later areas around NSW and similar restrictions and lockdowns in Victoria and South Australia.

It said its new ‘Honda Centres’ were not able to fully open in Sydney because of the lockdowns and Honda, like most car-makers, also had production hold-ups because of the semiconductor shortage.

But the fact is that most car brands increased their sales on the rising market in July and those who were off the pace were down by only a few percentage points and not even close to 62 per cent.

Honda started its agency model of selling cars on July 1, with the OEM taking back ownership of its vehicles and allocating them on demand to dealers. It also took control of warehousing, distribution and demonstration cars while dealers became agents and were paid on each vehicle sold.

Mercedes-Benz in Australia is planning a similar agency sales and distribution program.

By Neil Dowling and By John Mellor