Honda may remain in Australia with reduced network or appoint independent distributor, rules out departure

Honda has earlier this week reportedly been reconsidering its presence in the Australian market following claims that the Japanese brand has been ‘unprofitable’ Down Under, though the company has since ruled out leaving the country in a statement saying that it is ‘committed to the Australian market’.

Secret documents obtained by Car Advice revealed that dealers have been told that the company is considering three options – to completely exit the Australian market and close its national network of 106 dealers; to reduce the number of showrooms, or to sell its products through an independent distributor.

“Honda is committed to the Australian market and as a part of normal business, regularly assesses its operations and organisational performance. We committed to our dealer network that we would update them on our long-term plans in the first quarter of 2020 and we are planning to do this later this month,” Honda Australia said in a statement.

According to parts of a dealer bulletin sighted by Car Advice, some meetings between dealers and Honda Australia were conducted one-on-one, and some were as a group, though the Honda Dealer Council in the country has not been made aware of the purpose of these meetings, it said. There has, however been speculation that the meetings may be related to the restructuring of Honda’s retail supply chain, it noted.

Initially, the term ‘restructuring’ refers to the aforementioned three options for the Japanese brand in Australia, according to long-time Honda dealers who spoke to Car Advice on condition of anonymity, though with Honda stating that it will remain in the Australian market, a number of dealer sources said they expect the number of showrooms to be reduced by one-third, the report said.

Honda dealers in Australia have been informed that they will be told between March 23 and March 26 of future plans for the brand, and a media briefing for the country will take place March 27, according to the report. Honda’s sales in Australia dropped 15% in a market that recorded a 7.8% drop overall, with the Japanese brand’s 2019 sales its weakest in three years, the report said.

Honda’s tally of 43,800 sales last year was, however, still greater than its annual sales from 2009 to 2016, it noted, adding that Honda’s sales volume in 2008 – at the beginning of the global financial crisis – was about the same as in 2018, or about 51,000 new vehicles sold, according to the report.

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