Federal Court orders Honda to pay $6 million for misleading conduct

Honda Australia has been ordered to pay $6 million in penalties by a Federal Court, after the company was found to have misled its customers in 2021.

In the six-month lead-up to Honda switching to a so-called ‘agency model’ on 1 July 2021, thousands of customers were told in emails, text messages, and phone conversations that three dealerships had closed and would no longer be servicing Honda cars.

The introduction of the agency model – where the business was restructured so Honda Australia’s head office owns all stock of new cars, and showrooms are paid a set fee to sell vehicles at non-negotiable prices – resulted in several dealerships dropping the Japanese car brand from their franchises.

These included Astoria Honda in Brighton, Victoria, Tynan Motors in Sydney, NSW, and Burswood Honda in Burswood, WA.

Despite no longer being authorised Honda dealerships, these businesses remained open and were still capable of servicing Honda vehicles.

Honda owners were instead encouraged to book their next service through the brand’s website, which only included authorised dealerships.

The country’s peak consumer watchdog, the Australian Competition & Consumer Commission (ACCC), alleged the communications from Honda Australia to its customers were misleading and contravened Australian Consumer Law.

It’s understood Honda Australia cooperated with the ACCC during its investigation, and notified the Commission when it realised the misrepresentations had also gone out to customers of Burswood Honda.

“I consider that Honda’s cooperation with the ACCC, as outlined above, was substantial and should be taken into account to lower the penalty that would otherwise be imposed,” wrote Justice Moshinsky in his judgement.

“Although the contraventions … were not deliberate, they were nevertheless serious. The number of contraventions is large. The contraventions took place over a period of several months. Honda is a large company; a large penalty is therefore required to achieve specific and general deterrence,” he wrote.

“We took this case because we believed Honda Australia’s conduct harmed the dealerships and their customers,” ACCC Commissioner Liza Carver said in a written statement.

“Honda Australia deprived consumers of the opportunity to make an informed choice about their options for servicing their vehicle. It also caused likely financial loss to the dealerships by the false claim they were closing or had closed.”

Honda Australia continues to deal with the wake of the switch to the agency model, with dealerships suing the company claiming their long-term agreements had been breached, while also questioning the compensation offered by Honda during the transition.

Drive has contacted Honda Australia for comment.