The boss of Honda Australia says the Japanese brand is here to stay despite two years of record low sales – and a record low 1.1 per cent market share – and has vowed to bounce back from the recent slump with a broad range of hybrid and electric vehicles.
Honda sales hit a new low last year – dipping below 14,000 for the first time since records were kept, compared to a peak of 60,500 a decade and a half ago – however the brand has finally started to turn the corner.
Honda sales in Australia were up by 22 per cent in the first four months of this year compared to the same period last year, buoyed by sharp discounts and a seven-year warranty offer (up from the standard five-year coverage) on certain models in the first three months of 2024.
While Honda now has a hybrid version of every model in its range, it says the next step is to make its petrol-electric technology available in more affordable variants.
At the moment, Honda hybrid vehicles are $6000 dearer than their petrol-only equivalent – versus the $2500 price premium on Toyota hybrid vehicles.
Honda also only offers hybrid tech on the most expensive variants in its range, but the company says it is aiming to limbo to lower prices.
Beyond the hybrid expansion, Honda says it will have an electric car in its local line-up before 2028.
Honda Australia has also been wrestling with the switch to a fixed-price business model three years ago (since July 2021).
However the company says the sales slump that followed was driven by stock restrictions rather than higher RRPs amid the switch to non-negotiable prices on its new cars.
“There’s lots of commentary around … Honda’s fallen off a cliff,” Honda Australia Vice-President and Director, Carolyn McMahon, told a media briefing in Melbourne last week.
“Honda’s still here. We’re not going away. We want to make sure that we are here for the future. And we will step by step get this (business) model working well.
“Being in the Top 10 (car brands) is not something that we use in our plan.
“We took (the decision) to consolidate our business, to right-size our business, and to put us in a more sustainable position.
“One of the reasons we changed our business model was really because, if we didn’t, the survival of the franchise was under a big question mark.
“We’ve been around for 75 years globally, we’ve been in this country for 53 years. Our quality or reliability is second to none, and maybe we’ve just got to do a better job at communicating that. That’s what we’re focusing on.
“We can do more in telling the consumer about our product. We can do more in telling the consumer about the value of the ‘one price promise’, the quality of our vehicles.”
The Honda executive said, as with most other car brands, the company was hit hard by stock restrictions during the global pandemic from 2020 to 2022.
“It was really tough, obviously with COVID and the lack of (vehicle) supply. It hampered our ability to get to the volume level that we originally looked to be at,” said Ms McMahon.
“And last year, we were also hampered by stock availability. We had very limited stock in the first half of the year.
“However, from December (2023) onwards, huge stock came through. If you look at … January, February, March (2024), we’re getting back up to the levels that we would be expecting our pace to be running at.”
The Honda Australia boss said the company locked-in a broad range of hybrid and electric cars due in the second half of this decade long before the Federal Government announced radical vehicle emissions reduction targets.
“As far as we’re concerned, we welcome the government’s introduction of (the vehicle emissions reduction targets). It very much aligns with Honda’s long term target or vision of zero emissions.
“Our strategy is very much a stepping stone from electric-hybrid technology through to (solely) battery electric vehicles. We’re still on that strategy.
“Many (customers) feel very comfortable stepping from (a petrol car) into a hybrid before they step into a (solely) battery electric vehicle.
“We’ll be interested to see what (customer) demand does once the new (vehicle emissions targets) are in place.
“And also be very interested to see how as a country and as an industry we deal with the required infrastructure to be able to meet the new (emissions targets).”
Under the Federal Government’s vehicle emissions reduction plan, petrol and diesel cars will be penalised with higher prices to discourage people from buying them, and electric cars will be incentivised to encourage their take-up.
“We are very much sticking to our hybrid strategy. We think it’s the right strategy for us. We’ve got good take up of hybrid and you’ll start to see an expansion of that,” said Ms McMahon.
“Through all the new model launches over the last 18 months, we’ve now introduced a hybrid (variant) into every model.
“That was … the top (of the range) for each model. Now we’ll start to see an expansion of more hybrid vehicles within each model lineup. So you’ll start to see more affordable, more accessible (hybrid options).”
The Honda Australia boss would not be drawn on how much Honda will reduce the current $6000 hybrid price premium compared to its non hybrid models (Toyota Hybrid cars have a $2500 price premium versus their equivalent petrol models).
Honda says its current take-up of hybrid vehicles is 40 per cent across the range, exceeding the initial forecast that 25 per cent of the sales mix would be hybrid cars.
“(In terms of hybrid prices) we want to be competitive,” said Ms McMahon.
“I’m not going to say exactly what the (price) premium will be for hybrid, but certainly the cost of hybrid is coming down, which means that we can now expand it within our lineup.”
Source: Federal Chamber of Automotive Industries.
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