Does the car dealership model matter to you? How Honda’s new approach changes buying a car

How do you like to buy cars? The convenience of a dealer? Perhaps you roll the dice with a private sale? Or maybe something left field, such as an auction? 

I’ve bought more cars than I care to admit and I’ve used dealers to buy both new and used cars. I’ve taken countless chances on private sales, and am yet to be disappointed or burnt. I still own the last car I bought from an auction. 

For me, it’s all about the car. I don’t care about how I get it, but not everyone feels the same. 

With Honda’s rather great CR-V VTi recently visiting the EFTM Garage, together with a few questions being asked by Terry and Ken on Facebook, I thought it was time to see if Honda’s recent move away from a dealership model to an agency model was the right way to go. 

It was enough to see Terry cross Honda off his shopping list. Terry wrote, “It (Honda’s CRV) was on my shortlist late last year, but the dealer and service location uncertainty ruled it out.” Terry went on to explain that he was happy with the RAV4 that he ended up going with. Ken was less forgiving of the Big H. “Given the unknown nature of the Honda reorg of it’s dealers, I would have thought this to be the time when not to consider any Honda…”

Australia is an important market for Honda has been in here for donkey’s years, firstly, motorcycles and, later, cars. No doubt, Aussie cinema fans would have been bowled over by the sight of Elvis riding a Honda CB77 Superhawk in 1964’s Roustabout. They must have thought to themselves, ‘I want a slice of that!’ Others, meanwhile, would have been struck by the sporty (and tiny) S600 roadster, launched that same year. The S600 was Honda’s first mass produced car and was the forerunner of long standing nameplates, including Civic and Accord. Honda Australia Pty Ltd, Honda cars first subsidiary outside of Japan,  was launched in 1969 and the brand has been a mainstay of Australia’s roads ever since.

So, what’s different about how Honda are doing things? 

Previously, Honda has sold cars the same way as everyone else – the traditional dealership model. Here, the dealer usually owns the cars in the showroom, after having ordered them from the manufacturer. When you buy the shiny new thing in the window that has stolen your heart, you are, in effect, buying it from the dealer, not the manufacturer.

The agency model, now employed by Honda, is not unique to our friends from Minato City. Mercedes Benz has been using an agency model to shift their electric range. CUPRA have indicated that the only way to buy one of their cars will be via the agency model. 

The agency model involves the manufacturer, Honda in this case, owning and controlling all of the stock on hand. Dealers will no longer scrabble and haggle for your sale. Instead, dealers will be paid a fee for supplying your new car to you. Prices will be fixed and will be controlled by the manufacturer. 

Dealers aren’t happy because it will cut down on profits. Consumers aren’t happy because there may be a reduction in competition and the feeling of working with and ‘doing a deal’ with a dealer that you trust and have worked with often.  

On the other hand, internet sales will be easier, dealers aren’t stuck with duds they can’t sell and retained values should remain higher. 

Capgemini, business advisors, found that even most Tesla buyers, a brand considered a pioneer in online sales, “want personal contact with a dealer prior to buying online”. Capgemini suggests that this is an opportunity for car manufacturers to capitalise on their dealer network and blend a fixed price agency model with existing showrooms. 

So, what do you think? Do you even care, or will it cause you, like Terry, to cross ‘agency model’ brands off your shopping list?