Starting today, Japanese carmaker Honda will be selling their vehicles at fixed non-negotiable prices in Australia.
Customers looking to purchase Honda cars will be unable to negotiate on price after a widespread revamp of the Japanese carmakers traditional business model.
The restructure saw Honda decrease the number of dealerships they had nationally to 90, which was previously 105.
Some dealers have since separated their showrooms from service centres while Honda is looking at experimenting with “pop up” stores in shopping centres. The plan is to start with a temporary space in Indooroopilly Shopping Centre in Brisbane, before moving into the AutoMall facility inside the centre, which is expected to open at the end of the year.
Under the new arrangement, the price of most models in Honda’s lineup has risen by between $251 and $977. During this shuffle, Honda has cut some of its more affordable models.
Last year, the Honda Civic was available for as low as $24,990 driveaway however under the newly revised pricing structure, the Civic will be available from $31,990 driveaway as a better-equipped model.
While the prices are higher after the restructure, the new driveaway deals include metallic paint across all models, rather than just select models, and “premium” roadside assistance for the length of the five-year warranty.
Servicing costs has also been decreased to $125 for each of the first five visits, which was slashed by up to two-thirds, making Honda the cheapest for routine maintenance amongst the mainstream car brands in Australia.
Under the new arrangement, Honda dealers will become selling agents who will earn a flat fee per new car sold. Agents will not have the flexibility to negotiate on price unless they’re willing to surrender some of their own commission.
Dealers will display cars and have them available for test drives, however, the inventory will be held by Honda Australia who will then assign cars to customers as their orders come through, on a first-come, first-serve basis.
Under the old system, dealers would have to negotiate with another showroom to source an in-demand car if they did not have stock. However, not all dealers were as obliging.
According to Honda, “this will make it easier and quicker for customers to get the vehicle they want, in the colour and grade they want, rather than having to go from one site to another and shop around to find their preferred vehicle.”
In a statement issued by Honda Australia today, they said, “No more haggling or shopping around for the best price. With the Honda Price Promise, you’ll always pay the same price for your new car no matter which Honda Centre you visit – with all drive-away costs included.
You’ll pay just one price, before adding any accessories, wherever you go, with no pressure to buy. We believe it’s a much more transparent and enjoyable way to buy a new car.”
Industry experts foresaw price rises under a fixed-price structure.
German automaker Mercedes-Benz is expected to introduce fixed pricing in Australia from the 1st of January 2022.
Volkswagen group owned Cupra is also expected to follow a fixed price business model when it arrives on Australian shores next year but is yet to be confirmed at this stage.
The Australian Competition and Consumer Commission (ACCC) says that they are monitoring the rollout of the new fixed price business model, however, there are currently no laws are preventing the introduction of direct sales.
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