In mid-2021, Honda Australia made waves by transitioning to a non-negotiable pricing strategy, sparking a notable decline in sales. Despite this downturn, the brand stands by its decision, affirming that its agency sales model continues to resonate positively with its dealership network. Under the agency model introduced in July 2021, Honda took ownership of dealership stock and implemented fixed pricing nationwide.
While this shift initially led to a sharp decline in sales, with the brand recording its lowest sales figures in years, recent data suggests a rebound in performance. In the first quarter of 2024, Honda reported an 18.9 percent increase in sales compared to the same period in the previous year, attributed largely to the introduction of the ZR-V SUV.
Despite criticism surrounding the reduced volume of sales resulting from fixed pricing, Honda Australia director Carolyn McMahon remains steadfast in her support of the agency model. Speaking at the launch of the new Accord, McMahon emphasized the positive feedback received from Honda Centres, highlighting the benefits of the agency model amidst fluctuating interest rates and rising floor plan costs.
The model alleviates the burden of inventory management from dealerships, positioning Honda as a proactive guardian of its franchise partners’ profitability. Amidst the broader economic challenges affecting the automotive industry, Honda views its agency model as a mechanism for safeguarding its dealerships against financial pressures.
The brand’s commitment to continuous improvement is evident in its rigorous inventory and cash management processes aimed at enhancing operational efficiency. Honda’s adoption of the fixed-price agency model set a precedent in the industry, with Mercedes-Benz following suit in 2022. While both brands experienced a temporary dip in sales, the long-term benefits of the agency model are anticipated to solidify as the automotive domain evolves.