Stephen Collins

A WEAK Australian dollar is putting pressure on new-car sales, with the effects now tearing into the once-lucrative small-sedan segment.

Together with an exodus of sedan buyers who are moving to the SUV segment, the currency ebb is making OEMs look more closely at where their cars are being sourced.

Honda Australia this week said getting the exchange rate right was vital to making a model sink or swim in the competitive local market.

“The days of a strong, sustainable Aussie dollar won’t be seen again for quite a while,” Honda’s managing director, Stephen Collins, told GoAutoNews Premium.

“It is one factor in our sourcing strategy, though it depends on getting the right product from the best market.
“The Civic Type R, for example, is only available out of the UK, so we have no choice but to take it from there,” Mr Collins said.

He said that the key factor for Honda is where it can get the best business case; “the right car in the right spec at the right price, (and) where we can position it competitively. That’s where we aim to be.”

The dollar’s slide is one reason for declining sales of small sedans, according to Honda.

Mr Collins said in many cases buyers were moving to the SUV market, but he said the struggle to achieve a competitive price was made harder by the exchange rate.

“The small-sedan market numbers are declining, and we’re not alone,” he said.

“The question is whether it is going down the same path as the medium- and large-size sedans. I hope it’s not, but the trend at the moment is negative.”

He said Honda continues to push Civic as a nameplate because it has the same line-up, same specification and same price between the sedan and hatch variants.

“We do 66 per cent hatch and the remainder are sedans,” he said.

“The numbers are in line with the market that is heavily swayed to hatchbacks.

“That gap is probably increasing. That puts pressure on anyone playing in that small-sedan sector.

“There are some very good cars in there and also some good small SUVs – such as our HR-V – but, meanwhile, the total pie is shrinking.

“In a very competitive segment, there’s a lot of pressure on manufacturers. We’re happy with Civic in general, but if there were concerns, it would be about the direction of the sedan sector.”

On top of that, Mr Collins said the outlook for the Australian dollar does not appear too bright, making it a welcome time for overseas purchases and holidays (for Australians) but harder to glean a profit from importing.

“We think the dollar will remain weak in the medium term,” Mr Collins said. “We believe that over the longer term it will start to improve a little, but generally it’s weak.”

Honda sources most of its vehicles from Thailand, which has a free-trade agreement with Australia.

By Neil Dowling