Honda to Pay $6M in Penalties for Misleading Consumers About Dealership Closures
The Federal Court has ruled that Honda Australia Pty Ltd must pay $6 million in penalties after it was found to have engaged in misleading or deceptive conduct and made false representations to customers regarding dealership closures. The Australian Competition and Consumer Commission (ACCC) brought the case against Honda, accusing the company of misleading customers of former authorized Honda dealerships Astoria, Tynan, and Burswood.
Between January 2021 and June 2021, Honda Australia allegedly represented to customers that the three dealerships had closed or would no longer service Honda vehicles, despite this being untrue. These representations were made through emails, text messages, and phone conversations with customers.
During this period, Honda Australia was undergoing a restructuring process that led to the termination of franchise agreements with several authorized dealers, including Astoria, Tynan, and Burswood. However, the dealerships continued to operate independent service centers for Honda vehicles.
Honda Australia admitted to breaching the Australian Consumer Law by making misleading representations to thousands of customers, falsely claiming that the dealerships had closed and would no longer provide services. The Federal Court, however, determined that other statements about the dealerships did not violate the law.
The ACCC Commissioner, Liza Carver, stressed the harmful impact of Honda’s conduct on the dealerships and their customers, stating, 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. Carver emphasized the significance of the $6 million penalty, asserting that it sends a strong message to businesses about the consequences of misleading statements to consumers.
Honda Australia, a subsidiary of the Japanese company Honda Motor Co Limited, used to operate under a franchise model until July 2021 when it transitioned to an agency model for new vehicles. As part of this transition, Honda terminated franchise agreements with several authorized dealers, including Astoria, Tynan, and Burswood.
Astoria, located in Brighton and Bentleigh East, Melbourne, had been a Honda-branded dealership for around 50 years. Similarly, Tynan in Sutherland, NSW, had a longstanding partnership with Honda.
The ACCC initiated legal action against Honda Australia in April 2022, leading to the recent penalties imposed by the Federal Court.
The ruling serves as a reminder to businesses about the importance of providing accurate information to consumers and the potential consequences of making misleading statements. Honda Australia’s conduct not only affected customers’ ability to make informed decisions but also caused financial harm to the dealerships involved. The $6 million penalty acts as a deterrent, signaling the seriousness with which such conduct is viewed by regulators.
This case highlights the need for businesses to uphold their obligations under consumer protection laws and to communicate truthfully with their customers.
