Honda here to stay in Australia, sticking with controversial 'agency' sales strategy

Honda says it’s here to stay in Australia, with a panel of global executives standing firm on the Japanese brand’s commitment Down Under.

“Currently we’re building our business there, so we’re in a building phase,” Honda Australia CEO Jay Joseph said in an executive roundtable conference.

“Of course, we all know five years ago we changed our business model and we also made decisions about our lineup that dramatically affected volume. But we’re now poised to be in a much stronger position, and we’re beginning to grow that share back.

“I’m certainly committed to continuing that during my time [at Honda Australia], and I’m definitely feeling high expectations from everybody at this [executive table] to continue that trajectory.”

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Toshio Kuwahara, president and CEO for Asian Honda Motor Co, added that Mr Joseph’s appointment to the helm of Honda Australia is also a clear indication of the brand’s commitment to the Australian market.

“Jay has actually had a very long experience running our business in the United States, and has experienced many aspects of our business [in that region],” Mr Kuwahara said via interpreter.

“So the mere fact that Jay has been serving this position of president of [Honda Australia] starting in April this year actually, I would say, testifies to our commitment to Australia, and that we will continue to be there.”

In a follow-up interview with CarExpert, Mr Joseph said now that Honda Australia’s revised business model has settled – now that it has switched from a traditional dealer franchise model to an agency sales one – the brand is making “steady gains”.

“I want to acknowledge that things didn’t turn on a dime just because I showed up in April,” Mr Joseph said, “so I didn’t sprinkle any magic dust on anything – and suddenly sales are up [this year].

“When we measure on our fiscal year – which is April 1 to March 31 – I think our sales will be up 20 per cent this year compared to the prior year, and if you look on a calendar year basis it’s a little less than that – we’ll be over 15,000 for calendar year 2025, which is… more than 10 per cent over 2024.

“So we’re making steady gains, and we like to make steady gains. Steady is sustainable, big jumps can be disruptive to the system, disruptive to the network, and hard to sustain. We like to know cause and effect – ‘what did we do that worked?’, ‘what did we do that didn’t work?’ [We want to] repeat the good stuff, wash out the bad stuff.”

Mr Joseph then appeared to take a swipe at the Australian Automotive Dealer Association (AADA) for its criticism of the agency sales model, which Honda’s local CEO claims has only been a good thing for the brand’s network.

“I was at [the] AADA, and they invested a fair amount of energy into talking about how bad the agency model is, which I thought was interesting because in the Honda dealers in Australia that I’ve spoken with, none seem to have a problem with the agency model,” Mr Joseph continued.

“They like the predictability of it, the way we’ve structured things. The more cars they sell, the more money they make – that’s good for dealers, it’s good for business. So it’s funny that there’s criticism about the agency model, except for those working within it.

“Most importantly, it’s about protecting the consumer. What the agency model enables us to do, because we own the inventory and the dealers are authorised agents to sell each individual car one at a time on our behalf, it enables us to protect consumers and their investment.

“The ‘Price Promise’ is really one of the core things about the agency model – I’ll stop calling it the agency model – but the business model that we have where we’re selling to consumers in Australia.”

Mr Joseph then noted the shift in consumer attitudes towards fixed pricing since the COVID-19 pandemic, during which Honda Australia’s CEO claims “nobody complained about the price they paid” even if consumers were paying above retail price, simply because “you knew nobody else was going to buy it for less than you were” given supply shortages meant customer demand during that period far outstripped supply.

“So it isn’t necessarily that people want to haggle for the best price, they just want to know that nobody else is getting a better price than that – we guarantee that we lock it in,” Mr Joseph said.

“Sales consultants really like it, because you’re selling the vehicle on its inherent qualities and values – that’s a much better conversation to have than just duking it out over a few bucks.

“It isn’t just ‘no haggle’ pricing [either], it’s low-price service guaranteed for five years, it’s five years of roadside assistance, it’s our five-year warranty – all those other things that make it a very low cost of ownership and a very easy, pleasant ownership experience.

“That’s all part of the value proposition, and that’s what’s helping us to build sustainable business as consumers get their heads around [the agency model] and realise this is a nicer way to buy a car.”

Honda Australia made the switch to an agency sales model in July 2021, taking over ownership of its national inventory and introducing fixed national drive-away pricing.

The brand subsequently posted its two weakest sales years on record in Australia, dropping from 29,040 vehicles sold in 2020 (the last full year before going non-negotiable) to 14,215 sales in 2022, and 13,734 sales in 2023.

Last year saw some recovery, with Honda bumping up 2.6 per cent to 14,092 sales, and is on track this year to crack 15,000 units for the 2025 calendar year, as mentioned earlier.

Mr Joseph has signalled more forecasted growth in 2026, with the introduction of a wider range of e:HEV hybrid versions of the CR-V and ZR-V SUVs; the launch of the reborn Prelude sports coupe; as well as the launch of the brand’s first all-electric vehicle in Australia – the Super-One hatchback, due in the second half of 2026.

Honda’s local CEO has promised further product launches to plug gaps in the brand’s local lineup, though stopped short on details.

It’s understood the new 0 Series range of EVs is under consideration for our market, but the first production vehicles won’t be hitting overseas markets until at least 2027.

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