Honda Australia’s dealership switch won’t break consumer law – but the big payout will loom

Honda Australia The controversial switch to a dealership model does not breach Australian Consumer Law, but the carmaker may still have to pay nearly $10 million in compensation to one of its former dealers.

Honda Australia moved to a dealer model in July 2021, with the manufacturer taking ownership of vehicles sold through its dealers – who then become dealers rather than franchisees.

Of the 36 dealers who terminated their contracts early with Honda, all but three have reached compensation agreements with the automaker.

Former dealers Brighton Automotive Holdings Pty Ltd (Astoria) and Tynan Motors Pty Ltd (Tynan) then took Honda Australia to the Supreme Court of Victoria, although Astoria later became the sole party to the case after Tynan received a confidential settlement offer.

Astoria challenged Honda’s compensation offer and claimed the company had acted unconscionably in failing to disclose to dealers its plans to terminate dealer contracts as part of a previous dealer switch upon signing the present agreements.

Justice Matthews delivered his judgment in the Supreme Court of Victoria on May 24, concluding that Honda Australia had not breached the Australian Consumer Law by engaging in misleading or deceptive conduct or conduct. unconscionable after failing to disclose changes to its planned sales model to dealers.

However, Judge Matthews disagreed with Honda’s claim that Astoria Brighton only lost $1.6 million, instead agreeing with the former dealership’s financial assumption being assessed at more than $10 million.

Evan Stents of HWL Ebsworth Lawyers, the law firm representing Astoria Brighton, said: “Judge Matthews has now directed that Astoria Brighton’s entitlement to final damages be calculated by qualified accounting experts. each party used at trial her findings of fact in favor of Astoria Honda.” .

“Based on the parameters set by the Mathews Court of Justice decision, Astoria Brighton estimates that its entitlement to damages would likely exceed $10 million.”

Honda Australia acknowledges the High Court’s decision and the fact it will owe Astoria Brighton compensation.

“Honda Australia acknowledges the decision made by the Supreme Court of Victoria in relation to the legal proceedings with Brighton Automotive Holdings,” a Honda Australia spokesperson said.

“We welcome the Court’s finding that Honda Australia did not engage in misleading or deceptive conduct or unconscionable conduct under the Australian Consumer Law.

“This case relates to Brighton Automotive Holdings ceasing its status as a Honda dealer as part of the restructuring of Honda Australia’s business model in mid-2021. We have always acknowledged that Astoria will have to pay compensation for violations breach of contract.

“Honda Australia remains committed to supporting Honda Centers and its customers into the future.”

The final decision will be made at a later date.

This is the latest in a series of legal cases stemming from Honda Australia’s move to a dealership model.

in NovembereJanuary 2023 Many former Honda Australia dealers, including Astoria Brighton, sued Deloitte Motor Industry Services (a division of Deloitte Australia) claiming the company had a conflict of interest in assisting Honda in deciding compensation offers.

At the time, Deloitte was the audit and tax partner for fewer than 10 franchised Honda dealerships across Australia, Astoria Brighton co-owner Mark Avis told The New York Times. AFR “They used our own numbers against us” to offer lower prices based on years of poorer sales.

In December 2023The Federal Court has ruled Honda Australia will have to pay $6 million in fines after making false or misleading statements to customers of Astoria, Tynan and Burswood between January and May. June 2021.

The Australian Competition and Consumer Commission (ACCC) has accused Honda Australia of representing three dealerships that will close or have closed and are no longer able to service customers’ vehicles.

For example, a call center employee used wording such as “that dealership is closing,” while a text message reminder about vehicle maintenance said “your previous service dealership has closed.” close the door”.

Honda then cooperated with the ACCC throughout this process and the $6 million fine was divided into $5.5 million for misleading service reminder communications and $500,000 for 17 acts of misrepresentation by the dealer. made by the company’s call center.

Last monthHonda Australia has committed to the dealership model despite posting the weakest two sales years on record in Australia since the transition.

Its annual sales fell from 29,040 in 2020 (the last year before the switch to non-negotiable pricing) to 14,215 sales in 2022 and 13,734 sales in 2023.

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