In an exclusive interview with Honda Australia director Stephen Collins, GoAutoNews Premium found that the brand still hopes to achieve its target of 20,000 units a year once the agency system is fully embraced and restrictions on community movement are lifted.

“We’re still in a transition phase and we’re comfortable with that,” Mr Collins said, adding that the transition “may take a bit of time”.

“But lockdowns in Victoria and NSW make it tougher on our centres in those particular markets.”

Honda Australia announced last year it would change from a conventional dealer franchise system to an agency system, where dealers become agents and the stock and even demo vehicles belong to the factory.

It operates by paying agents a commission for vehicles sold and ensures a one-price, no-haggle formula across the nation.

In introducing the agency model from July 1 this year, the number of Honda dealers was reduced and Honda Australia cut annual sales targets to 20,000 units from the previous year’s 43,000 units.

The number of dealers in capital cities was drastically cut. In Melbourne, for example, only three Honda agents remain with 10 dealers removed from the market. This means high profile “billboards” (dealership premises) in prominent locations with hundreds of thousands of cars passing each day providing exposure to the Honda brand have effectively “gone dark”.

2022 Honda Civic Hatch

The satellite service and sales operations (and especially the sales showrooms), which are supposed to infill the very large areas of responsibility, have yet to catch up with the move to agency and involve significant investments in some of the most expensive real estate in the nation. 

Meanwhile, Mr Collins said the decision to adopt an agency model – similar to that started by Honda in New Zealand 20 years ago – was “100 per cent a local decision”.

“We needed to go up the tree (to Honda in Japan) to get some approvals, but it was a 100 per cent decision by the board,” he said.

“It was our call and I think the spotlight is on us around the world to see how it goes.

“I don’t know if other markets for Honda will follow us, but I do know that there are a lot of markets, particularly in Europe, that are looking at what we’ve done and looking to see what successes (we have) and what they may be able to learn from it.”

Mr Collins said that despite the lockdown restrictions, the agency model was “working well” and feedback from customers was “positive”.

“Customers comment on the smoothness of the transaction and the fact that it’s transparent,” he said.

Stephen Collins

“A lot of people are liking the no-haggle component. We are also seeing a small percentage (of customers) who aren’t happy because they want the haggle – but that’s not available. We expected that. 

“What’s also coming through is that it’s just been an enormous training effort to get all of our 90 centres familiar with what we call the new customer experience platform which is a new selling system. 

“So over the last, I would say, month to maybe two months, the consultants have been getting familiar with it and now it’s starting to get up to speed.

“So that’s taken some time. It’s been an enormous effort to get everyone up to that pace and up to their familiarity with the new system.”

Mr Collins said that throughout this learning curve “the key things are coming through are the transparency of the sales transaction and the online configurator on the website which is extremely popular”.

“I’m seeing feedback that we’re getting people coming in with their configured car and being a fair way down the track before they sit down with one of the consultants.” 

Honda has no plans for additional agents with Mr Collins saying the figure of about 90 is right.

“We have 90 sites nationally and that’s about 30 metropolitan and 60 provincial with a couple coming on steam in the past few weeks.

2022 Honda HR-V

“That’s pretty much fully operational although we will know in the next few weeks if we need to adjust that. So I think the balance is about right now and the coverage is good.”

Mr Collins told GoAutoNews Premium, for example, that Honda has three agency owners in Melbourne but a total of 11 sales and service outlets.

“I think an important point is that the actual coverage is materially similar to what it was before the agency model was started,” he said.

“Now we have fewer dealerships and we have 10 metropolitan owners nationally. But the coverage for sales and service is really quite similar.”

Mr Collins said the agents had been happy with the progress and few had indicated they would hand back the franchise.

“We’ve had a couple of small rural areas that have decided not to continue, but it’s very much the exception,” he said.

“But it’s not a situation where they are putting their hands up saying it’s too hard. I haven’t had that at all.”

Mr Collins said Honda Australia had changed the way it supplies crash parts, with the appointment of “partners” that specialise in supplying the parts.

“Nationally, about 15 of our agents will specialise in these parts,” he said.

“They will have a wide area of responsibility so in Melbourne, for example, two partners will be involved in these parts. It’s not for everyone and it needs a different structure than what we have used in the past.

“The discounts are not as strong as they were before. We have positioned ourselves where we need to make it sustainable for the future. 

“We’re still committed to providing as good a value as we possibly can, but we have changed the discount structure so it is a little bit different between the crash part deal and the non-crash part deal.”

In regard to products, Mr Collins said that the future product changes over the next 12 months will be the launch of the Civic five-door towards the end of this year, and an all-new HR-V SUV before the middle of 2022.

“The Civic will come with two engine options – petrol and hybrid – and be a premium position vehicle,” he said.

“It will be sourced out of Japan and be very well equipped. We’re pretty excited about it. 

“Following that, in the first half of the year, will be the all-new HR-V. This will also be available in petrol and hybrid as part of Honda’s plan to launch a full model change with a hybrid option.

“That’s the immediate future and we’ll discuss what comes after that at a later time.”

By Neil Dowling and John Mellor