2022 Honda HR-V SUV: Price Pumped Up, Sales Continue to Plummet
Honda Australia bravely announces driveaway fixed pricing for their new small SUV, the HR-V. It's the cheapest Honda you can buy. Surprisingly, sales have flopped…
The barrier to ownership for a Honda HR-V has risen a staggering 27 per cent between 2020 and now, and at the same time, Honda sales have tanked. Go figure.
In this report, let’s examine why the HR-V small SUV is just another brick in Honda’s soon-to-collapse wall. Seriously, this brand’s existence has surely not got more than two years left in it. If you ask me, that is.
So, you may or may not be aware, Honda shafted its dealers last year, and absolutely earned their opprobrium. They shut a bunch of showrooms, then they fixed prices (meaning consumers like you couldn’t negotiate), using a loophole in the legislation, and drive-away prices went up, and up.
In the process of this public dealer-closure and revenue-slashing ceremony, Honda Australia deleted the Jazz and City models, eliminated the entry variants of its extant models and essentially did everything a carmaker would do if its objective were to slam the gate in buyers’ faces and reduce sales.
Unsurprisingly, this is exactly what happened. Sales year to date (meaning for January and Feb. 2022) are down. For February, Honda sales dropped 30 per cent, compared with Feb 2021, when they still had proper dealers. For January and February: 40 per cent down, compared with Jan, and Feb, in 2021.
For full-year 2021, Honda sales tanked by 40 per cent, compared with 2020. To put this in perspective, that’s about 11,500 fewer sales, or about $350 million dollars reduction in revenue. Very few balance sheets remain black in the face of such a collapse. Like, there’s not that much wholesale margin in new cars.
Honda, of course, blames its recent collapse on other factors - such as the pandemic and the computer chip crisis. How convenient. And of course the majority of motoring reporters just regurgitate this bullshit, for fear of upsetting the advertising apple-cart.
You watch, if Honda Australia does collapse in the manner of Holden, they’ll blame everything else but themselves - consumers, the economy, the pandemic, the chip shortage, there’ll be a fire sale, and of course, the epic truckload of nostalgia in a long line of press releases. But they won’t take ownership.
But I’d suggest other carmakers experienced the pandemic and the chip shortage, more or less equally, and if you look at full year 2021 sales versus 2020 here in Australia, everybody else did okay.
While Honda was screaming in commercial agony, Toyota went up 9 per cent, Mazda and Subaru both gained 18 per cent, Mitsubishi added 16 per cent, Hyundai rose 12 per cent, Kia climbed 21 per cent and even Nissan, a brand with a questionable vehicle portfolio and despite my best efforts to warn the broader public, at best they managed to forge an 8 per cent sales increase.
So, if 2021 Australian new car sales were a scientific experiment, it’s safe to say we just outlined reasonable experimental controls for the pandemic and the chip shortage, and the commercial operating environment. It’s only Honda that represents an anomaly here, and this must be due to their actions.
I’d call that a pretty compelling hypothesis.
Back in 2020, you could have driven away in an entry-level HR-V for about $28,800; many people did exactly that because they sold 8000 units. Today, the base-model will cost you a fixed price of $36,700. That’s a rise of almost $8000, or 27 per cent. This is a highly competitive, price-sensitive market, so the term ‘commercial suicide’ springs to mind.
Couple of points on this:
Firstly, Honda can stop using the term ‘reimagining’ for the HR-V. You didn’t ‘reimagine’ the HR-V, you redesigned it. Could we at least respect the English language that much?
Reimagining the bathroom typically does not result in an upgraded bathroom, it’s just different in your head. That’s what the imagination is. You typically have to gut the bathroom, re-tile and add a new toilet. It’s similar to ‘belief’, only less whacky.
As for this vehicle being a ‘premium SUV’, this, in my view, is the kind of marketing masturbation that requires both hands, and rather a lot of enthusiasm, in my view. A Honda HR-V might dream of being a BMW, but the possibility of its R&D, the design department and the attention to detail is remote, in my view. It’s a compact Japanese SUV that competes with Eclipse Cross, Kona, Seltos, XV, C-HR. It does not offer anything substantially bold or interesting, just like the Isuzu MU-X is not ‘exceptional’ or ‘extraordinary’ - it’s just better than the old dinosaur, but still overly-expensive.
To be fair, Honda says the new base-model HR-V has a spec level somewhere in between the previous VTi-S and RS HR-V variants - the average drive-away pricing of which in 2020, before Honda caught this terrible autoimmune disorder, was about $33,600.
So, on this basis, the elevation of the price is just over $3000, or nine per cent.
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SALES FIGURES TELL A DIFFERENT STORY
Here’s how Honda tries to spin its new anti-consumer, anti-sales, fixed-pricing strategy:
Absolutely, you will find the same extortionately high price for an HR-V in whichever dealership you’re unfortunate enough to walk into. Same goes for the equally over-priced 2022 Civic at nearly $50K!
Visit that Honda centre (if you can find one) and experience that joy. That joyful thrill of paying the worst possible price, of not being able to negotiate a better deal on a vehicle costing between $3000 and $8000 more than it was for essentially the equivalent vehicle two years ago.
It’s just Honda’s way of saying thanks for your customer loyalty.
The ‘e:HEV’. Yes, Honda has put a colon in the name of its brand new hybrid-electric vehicle. Faraday would have been so proud.
And that commitment to introduce a hybrid, today, in this market. So brave doing that just 21 years after Toyota essentially proved hybrid was probably a goer. Finger right on the jugular there, senior Honda product executives.
The last time Honda did something vaguely interesting with a hybrid was in 2009 with the Insight. And that was a flop, commercially. Maybe the e-Honda will get here in time for helping Australia meet that 2050 net-zero carbon emissions target.
My strong advice here is that the HR-V is probably acceptable, as a vehicle in isolation relative to the activities of the brand, but it’s definitely over-priced.
The main risk for you is if Honda ‘does a Holden’ over the next couple of years and disappears from the Australian market. You’ll (probably) be down to getting parts and servicing from some unknown faceless operation.
Buy a Yaris Cross, a Seltos, C-HR, Kona, XV or Eclipse Cross instead. It’ll be cheaper and just as good at doing all the kinds of things you need a compact SUV to do.
I challenge Brad to:
A) show us all these alleged ‘many benefits’ of price-fixing. Most advanced western democracies have laws against cartel-like conduct and price-fixing, etc., because this always results in the worst possible deal for consumers.
Honda Australia is doing this because it’s a last-ditch effort to survive commercially. Their loss-making became a boardroom issue back in Japan, and desperate times called for desperate measures.
Mercedes is doing it because they’re the kind of nasty bastards who were always at war with their dealers, many of whom were also ruthless with customers (personal opinion). So, this commercial arrangement kinda suited Mercedes, right up until 80 per cent of the boned dealers sued them for $650 million in damages, and their sales also tanked.
Labor Senator Deborah O’Neill captures the mood perfectly…
B) Conflict of interest: I invite you to show us all exactly where my argument is flawed. Or where the data on which it is based is in error. I never recommended Honda or Mercedes anyway, so my revenue there was insubstantial at best.
C) Let’s say every new car brand in the nation does this tomorrow. I’ll work something out with the carmakers I do recommend, immediately - because the one thing carmakers are emphatically poor at is actually generating sales enquiries. They’re terrible at it, and the market is hyper-competitive. This is where I live.
So, the multi-million question is, if that fails and every carmaker kills-off its dealers the next day, what happens to AutoExpert. My commercial partners might be up against it, but I’ll be completely okay, commercially. So thanks very much for your overwhelming concern on that.
Toyota RAV4 is the best-selling medium SUV in Australia, offering good resale value and envious fuel economy. If you need an enormous boot and a simple, functional family vehicle, RAV4 is hard to beat.