Carmaker Honda could be fined $6 million for misleading customers over dealer closures in NSW, VIC, WA

A popular carmaker could be forced to fork out millions after it admitted to falsely telling customers at three service centres the businesses were going to be shut down.

Federal Court Justice Nathan Moshinsky on Friday recommended Honda pay $6 million after it was sued by the Australian Competition and Consumer Commission.

The Japanese automaker admitted in court to calling, texting, and emailing more than 1000 customers with false claims three former Honda dealers were closing.

In his judgement, Justice Moshinsky said Honda had contravened consumer law and may have “caused loss to the (dealers) by way of loss of business” to the dealers.

“Although the contraventions were not deliberate, they were nevertheless serious. The number of contraventions is large (and) took place over a period of months,” he said.

“Honda is a large company; a large penalty is therefore required to achieve specific and general deterrence. Honda’s co-operation with the ACCC reduces the penalty.”

The lawsuit brought by the consumer watchdog centred around three former Honda dealers; Astoria in Victoria, Tynan Motors in NSW, and Burswood in Western Australia.

The three centres were operating as franchised dealers for Honda before a strategic review in March 2020 determined the car company would abandon the franchise model.

As a result, the dealer agreements struck between Honda and dealerships nationwide were terminated, and only a select few were offered a chance to stay on with the carmaker.

The court was told many dealerships ceased all operations as a result of the termination, while others – including the three in the suit – became independent service centres.

The two-day hearing heard from some of Honda Australia’s senior management, including the company’s director, Carolyn McMahon.

The executives gave evidence about concerns raised by the dealers as to the wording of customer correspondence, as well as the use of a media campaign to promote Honda dealers.

In one call in January 2021, a customer asked if the Astoria dealer in Brighton was “going to still remain”.

“No … that dealership is closing down,” a Honda agent replied.

Emails sent to customers at the Astoria and Tynan dealers stated they were “now closed”. Later emails alternatively stated they were no longer authorised Honda dealers.

Justice Moshinsky said the “misleading” emails were mitigated to some extent by communications from Astoria and Tynan to their customers which clarified they were not closing.

He went on to state that while Honda may have derived benefit by retaining customers in its own network, he was unable to “form a concluded view on the issue”.

Justice Moshinsky also dismissed claims by the ACCC that further emails, statements on the Honda website, and one call centre communication were also contraventions of consumer law.

Honda and the ACCC were ordered to reply to the court within two days as to agreement on costs, or to reappear on Monday for a hearing into the fee to be paid by Honda.

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