08 November 2010

Honda’s Decline In New Zealand

In NZ private buyers pay top dollar and fleet buyers get generous discounts. When the private buyer comes to sell his car, its value had been seriously undermined by large numbers of fleet cars being returned to the used market. Private buyers have shunned the new market, but can be enticed by discounts which most brands offer from time to time.

Honda NZ had a plan. Have the same price for all sales - private or fleet - and set no haggle prices. To control this, Honda would own the cars and dealers would take a small commission per sale. Most of the dealer profit would come from servicing. I liked the idea. Honda NZ set its prices at full retail but they held their value well. Sales rose and by 2007, Honda had over 8% market share of the NZ passenger car market. The importer must have been doing well thank you very much.

However, the Yen went up and so did Hondas prices, more than other makes. Even good second hand value could not compensate for the skyrocketing new prices. Market share fell and by 2009 (only two short years) it had halved to 4.1% and Honda’s rank dropped from 4th to 9th. For Jan-Oct 2010 it has gone to 3.9%. The once popular Civic model fell from 11th best seller in ’07 to 33rd in two years.

Honda now needs to realign its pricing. The City model from Thailand is better priced as is the new Insight and these should help but neither will be big sellers. In the UK, they have a hatch back Civic that - with the current exchange rate - would sell well in NZ, as Kiwis love versatile 5 door models. Also the Jazz (Fit) is made in the UK now and could be sourced from there if the Yen remains high. If nothing changes, the likes of VW and or Subaru will knock Honda out of the top 10 and make Honda very much a marginal brand in this country.

What it means to me: Honda cars are good but in the mass car market, over price your cars and the customer looks elsewhere.

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