Will Honda leave Australia?
First it was Infiniti, then Holden. Is Honda to be Australia's next automotive brand casualty?
Honda is rooted Down Under. On the balance of probability, they’re either going to close outright, or at the very least, lose a limb.
News is emerging that Honda will decide its immediate future here in Australia, with the axe falling within the fortnight. And all the options are bad.
The company could do a ‘Holden’ and pull out of the market entirely, or pull out and appoint an independent distributor to continue its anorexic sales trajectory. Or they could remain here, and bone about one-third of existing dealers - which would be 30-40 dealers for the chop.
Honda currently operates 106 showrooms nationally.
I certainly hope this recent development, off the back of Holden’s imminent (confirmed) closure, serves to inform you, if you’re in the market for a new car. Stability of the parent company - momentum - is vitally important to the ownership proposition.
They can pull the pin any time, but you’re stuck with the car you bought and/or the financial and logistic consequences. More on that shortly.
I’ve been recommending against buying a Honda since 2015. Back then, I wore a shirt and tie for these reports, and I was a lot less unplugged than now (because back then I still saw some value on appearing on the free-to-air networks).
Grown men salivate at the mere words “Integra Type R”.
Even so, on the 15th of June that year I published a package called ‘How Honda Lost the Plot, and Why Buying One is a Mistake’. Another bridge instantly toasted. Because car companies cannot cop criticism - even valid criticism. (Take the timewarp here >>)
Essentially, the problem is: Honda got brain damage in the GFC. In the 12 long years since then, the company has failed to innovate, and it has burned all the considerable capital it amassed in the 1990s - when it earned the reputation of the BMW of the East.
I never do things by half measures, evidently.
We’re talking about the inventor of VTEC. A former F1 powerhouse. The quintessential Japanese automotive innovator. (Today, that’s Mazda.)
I started as a motoring journalist at the start of the 1990s, just as the last dinosaurs were croaking, and I had great fun in sundry Civic Type Rs, Integra Type Rs, the CR-X, and the incredible 1st generation NSX.
Ah yes, the NSX. One of the few cars I have ever crashed - albeit at walking pace. I still remember it as if yesterday - well done there, dickhead. I mean, why crash a cheap car?
Image: Nic Redhead/Flickr
Cold case study
Honda's current predicament is what happens when you stall on the grid for 12 long years and epically fail to innovate. I did a simple ‘idiot’s guide to power and torque’ a few years back which proved how shit their engines are now >>
It’s the 21st Century and Honda offers essentially just seven cars in its largely obsolete and/or irrelevant lineup.
Jazz and City are flipsides of the same coin which sold 5932 units collectively in 2019, and which nobody statistically buys. I don’t know why they continue to bother. It has to cost them more to support selling the City than they get from offloading just 800 units in 2019.
Accord, ditto. An expensive entrant in a segment nobody cares about. Just 177 sales last year; that’s about 1.5 cars per dealership, on average. Accord nose-dived over 21 per cent in 2019 sales versus 2018, just 10,000 units, losing to Toyota Corolla (30,000), Hyundai i30 (28,000), Mazda 3 (25,000), Kia Cerato (22,000) and Volkswagen Golf (14,000).
HR-V cleft lip: If your kids are nearby, cover their eyes
HR-V is a nasty SUV shitheap with a completely outdated 1.8-litre port-injected petrol engine in the 21st Century - from the inventor of VTEC. That same outdated engine is rust-seized into half the Civic range.
HR-V sold 11,731 units last year (down 3%), beaten by Hyundai Kona on 13,341 (up 8%), Mazda CX-3 on 14,813 (down 9%), Mitsubishi ASX on 20,000 (up 9%), and it was almost beaten by the atrocious Nissan Squashcourt.
Odyssey: World’s ugliest people mover. World’s oldest 2.4-litre port-injected petrol engine boat anchor. A fully loaded Odyssey is about $16,000 cheaper than a fully loaded Kia Carnival. And it’s a Honda. And yet, Carnival outsells Odyssey by four for every one.
The flagship engine, the 1.5-litre turbo petrol four (with decent outputs admittedly), is plagued by oil dilution issues. Well done there, inventor of VTEC. Honda in 2020 is simply not the company I loved in the mid-1990s. NSX is still awesome, obviously. They sold three last year, in Australia, but big deal. It’s completely irrelevant, commercially.
The last remotely interesting R&D they did was the Clarity hydrogen fuel cell vehicle in the mid-to-late 2000s which had great potential-potential, right before they copped a patu onewa to the pterion. The Clarity was only ever a prick-tease at best.
The internal haemorrhaging continues today because the promise of two-thirds of Honda’s European sales being electric by 2025 is clearly never going to happen, just like their efforts in hydrogen fuel cells for the mass market.
Honda is a case study for other carmakers - about the false economy - the sheer, overwhelming stupidity - of ripping every red cent out of R&D, and never reinstating it. This is what happens.
And then, glace cherry on the icing on this particular bullshit management cake: put the marketers in charge. See how long you can trade on a reputation you last deserved a quarter of a century ago. Just ask Ford.
It’s a disgraceful case of long-term mis-management at the highest level.
Retire incognito?
This is a warning, like a flashing beacon screaming ‘hazard ahead’ - to brands like Hyundai, Kia and Mazda - in particular. The ones with momentum today - this is what you risk if you sit on your arse and decline to keep pushing. For whatever reason.
We understand the anxiousness amongst the network. We are in high level discussions about the mid- and long-term [plans for Australia]. Our profit situation is on the global board agenda, which we are trying to fix. This means it is very serious
That’s, allegedly, from the minutes at a confidential dealer meeting last May. Honda sales have tanked in Australia since the GFC, with only one or two years seeming even vestigially hopeful.
And there’s a salient difference to consider, between Honda and Holden. GM can pull out of right-drive globally. If the company decides left-hook is no longer core business, you can at least understand that.
But, being Japanese, left-hook is hardly optional. This is, after all, how they roll back in the motherland. This is despite the fact that the vast majority of Hondas on offer in Australia will never actually see the sunrise in the land of the rising sun - only Odyssey and NSX are authentically made in Japan.
Honda Australia attempts to sell paint protection on YouTube.
Civic Type R is built in the UK, and all the other manufacturing for our Hondas has long been outsourced to Thailand. Not that there’s anything wrong with that.
Honda’s local management here, where it’s really just an import and marketing operation, has, in my personal opinion, been worse than useless since the GFC. Certainly they have, again, in my personal opinion, seemed to fail to stem preventable bleeding in the sales figures.
I can’t imagine a senior executive management team more out of touch with ordinary car buyers - except of course at Holden. And, of course, Nissan. (Actually, if you want to look for the next big automotive brand to close in Australia: it’s gotta be Nissan.)
From the top
Current holder of the Honda Australia poisoned chalice, managing director Stephen Collins has allegedly said:
I won’t speculate on what the outcomes might be, but aim to update you and be open and transparent … when we have news.
-Stephen Collins, Honda Australia, allegedly
That “news” - the big opportunity for openness and transparency - is imminent: Dealers will be officially notified between March 23 and 26. That’s the week after next. And they intend to drop it on the media - and henceforth you - the next day. That’s Friday the 27th of March. Watch this space.
Whatever the outcome, it’s going to be a disaster for existing Honda owners, and - if the brand continues in Australia - there will be even less reason to recommend actually owning one.
If they pull out, service and support will become a nightmare. Just as it will be with Holden. If a private importer takes over, this is likely to be a disaster too.
Frankly, some private automotive distributors have the worst possible record on support. They’re just shit at it. They don’t invest in technical training, local parts inventories are unworkably low and the ownership experience turns into a shit-show generally.
The best outcome here would be Inchcape - the independent importer of Subaru. But I’m really not so sure Inchcape’s bean-counters would construe Honda’s crap inventory of current homologated product and top-heavy dealer network to be commercially attractive.
Even the best-case outcome here, for you, if you are an existing Honda owner, is crap. Fewer dealerships means less competition for things like servicing and the sale of spare parts - and that means prices and cost of ownership will head in one direction only: up.
Convenience is likely to take a hit, too. If your local Honda dealer closes, you’ll be travelling further for a service or diagnosis. In the city, maybe that’s just a couple of suburbs. But in regional Australia, you could be in for several hundred kilometres of additional round trip, which will kinda suck. And of course, resale values will tank.
And I’m really not sure how you’ll go with your consumer law entitlements, post-warranty - because if there’s a breach of the ‘acceptable quality’ consumer guarantee, your fundamental claim is against the dealer which sold you the car. Good luck with that if they no longer exist.
Freaky Friday
And I’m really not sure how you’ll go with your consumer law entitlements, post-warranty - because if there’s a breach of the ‘acceptable quality’ consumer guarantee, your fundamental claim is against the dealer which sold you the car. Good luck with that if they no longer exist.
If you own a Honda, I am sorry to drop this on you - I most certainly am. But if you’re thinking about buying one, my advice would be: Don’t.
Watch this space - I’ll let you know what’s happening ASAP after I learn the news, on the 27th.
If they’re half smart, they’ll bury the press announcement until late in the day on Friday, so it misses the nightly network news production deadlines. I might not be in a position, therefore, to keep you up to date on this until the 28th - but I will try.
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.