The Federal Court has mandated that Honda must pay $6 million for engaging in deceptive conduct.

Honda Australia Fined $6 Million for Deception of Customers

A Federal Court has ordered Honda Australia to pay $6 million in fines after the car manufacturer was found to have breached the Australian Consumer Law by deceiving its customers. The ruling comes as Honda continues to face challenges stemming from its move to a fixed-price “agency model.”

The court found that in the six months leading up to the switch to the agency model on July 1, 2021, Honda Australia had misled thousands of customers through emails, text messages, and phone conversations. Customers were informed that three dealerships had closed and would no longer service Honda cars. These dealerships included Astoria Honda in Brighton, Victoria, Tynan Motors in Sydney, NSW, and Burswood Honda in Burswood, WA.

However, despite no longer being authorized Honda dealers, these businesses remained open and continued to service Honda vehicles. Customers were encouraged to book their next service through the brand’s website, which only listed authorized dealers.

The Australian Competition and Consumer Commission (ACCC) took legal action against Honda Australia, alleging that the car company’s communications to its customers were misleading and in violation of the Australian Consumer Law. The court found that Honda Australia cooperated with the ACCC during its investigation and notified the Commission when it became aware that misrepresentations had reached Burswood Honda customers.

In his ruling, Judge Moshinsky acknowledged Honda Australia’s cooperation with the ACCC but emphasized that the violations were serious. He noted that the number of violations was large, occurred over several months, and involved a large company, necessitating a significant penalty for specific and general deterrence.

ACCC Commissioner Liza Carver stated, “We took this case because we believed Honda Australia’s conduct was detrimental to dealers and their customers. Honda Australia deprived consumers of the opportunity to make an informed decision about their options for servicing their vehicle and caused likely financial loss to dealers due to the false claim that they were closing or had closed.”

The court’s decision comes as Honda Australia continues to grapple with the repercussions of its transition to the agency model. Several dealers have sued the company, alleging that their long-term agreements had been violated and questioning the compensation offered by Honda during the transition.

In light of the ruling, Drive has reached out to Honda Australia for comment on the matter.

The legal developments have triggered scrutiny and concern from both consumers and industry experts. Ben Zachariah, an experienced automotive writer and journalist based in Melbourne, noted that Honda Australia’s shift to the agency model has raised significant challenges for the company and its dealers. Zachariah, who has worked in the automotive industry for over two decades, emphasized the importance of the matter and urged further examination of the consequences of the agency model transition.

As Honda Australia grapples with the fallout from the Federal Court’s ruling and ongoing legal challenges from dealers, industry observers will continue to monitor the evolving situation and its impact on the automotive sector.

Honda Australia’s difficulties serve as a cautionary tale for other companies considering major business model changes and underline the critical importance of compliance with consumer protection laws. The impact of the agency model transition on dealers, customers, and other stakeholders underscores the far-reaching implications of such strategic shifts and the imperative of transparent and ethical conduct in business operations.

As the automotive industry navigates rapid shifts and innovations, ensuring compliance with consumer protection laws, maintaining open communication with stakeholders, and upholding ethical standards will be essential for companies to foster trust, safeguard their reputation, and build sustainable success in an increasingly competitive and dynamic marketplace.