Honda reveals its Australian future
Honda will meet with dealers this month to discuss a major restructure of its network amid sliding sales.
Industry sources suggest there will a rationalisation of the company's dealer network, which currently includes more than 100 dealers.
One senior dealer, who declined to be named, said he believed the brand would move towards a controversial "agency" model, whereby dealers would no longer sell the vehicles but simply deliver them to customers.
"Honda would own all the vehicles and hire dealers to deliver them to customers and service them," he said.
"I can't see it working. It's not the way the market works."
He said the company would brief dealers on its plans on March 23 but already some had been told they would not be offered new franchises.
All dealers had been advised not to make large investments in renovations or expansion.
"A while back they put a stop on further expenditure and told us the situation was very dire," he said.
"It's a diabolic situation. It's extremely difficult at the moment."
Rumours have been circulating the brand was reviewing its business and one of the options on the table was a complete withdrawal from the market.
But Honda said it was committed to Australia and would not follow Holden by leaving the country.
Honda spokeswoman Naomi Rebeschini told News Corp Australia "we are not pulling out, we are not withdrawing".
"Honda is committed to the Australian market and as a part of normal business, regularly assesses its operations and organisational performance," she said.
"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."
The manufacturer had a difficult year in 2019 as sales fell by nearly 15 per cent, almost double the decline of a slowing market.
While sales of SUVS such as the Honda HR-V and CR-V remain strong, passenger cars are a problem for the brand. Honda has not committed to introducing the next-generation Jazz hatch, a compact car with narrow profit margins for struggling dealers.
Dealers believe an entry level model such as the Jazz is needed to bring young people into the brand.
"Every brand needs an entry level vehicle," one dealer said.
Honda launched its new mid-sized Accord sedan in December 2019 on the day Holden killed the Commodore.
Speaking to reporters at the time, Honda managing director Stephen Collins said it expected to sell just 150 cars per year, well down on the 10,000-plus Honda delivered a decade ago.
The Takata airbag scandal hit Honda harder than any brand relative to its size.
The brand sold less than 44,000 cars last year, and has already replaced airbags in 361,600 cars around Australia, putting a significant strain on its operations.
Honda-powered cars run by Red Bull are expected to be frontrunners at this weekend's Australian Grand Prix.
But the brand will be the only manufacturer involved without an official presence at Albert Park.
Following Holden's departure, rival brands including Ford, Mercedes-Benz and Fiat Chrysler Automobiles have reiterated their commitment to Australia.