Honda Australia Faces Potential $10 Million Damages in Dealer Lawsuit
Honda Australia Faces Potential $10 Million Damages in Dealer Lawsuit
Will Honda Australia be able to recover from the financial blow of the legal action?
Honda Australia may have to pay nearly $10 million in damages to one of its former dealers following its controversial switch to an agency model. While the move did not breach Australian Consumer Law, the carmaker is still facing legal consequences. Find out more about the ongoing lawsuit and its impact on Honda Australia.
Honda Australia’s decision to transition to an agency model in July 2021 created a stir in the automotive industry. Under the new model, Honda took ownership of the cars sold through its dealers, who became agents instead of franchisees. While the move was controversial, it did not breach Australian Consumer Law.
Out of the 36 dealers whose contracts were terminated prematurely, all but three reached settlements with Honda Australia for compensation. Former dealers Brighton Automotive Holdings and Tynan Motors took the carmaker to the Supreme Court of Victoria.
Brighton Automotive Holdings, also known as Astoria, claimed that Honda had engaged in unconscionable conduct by failing to disclose its plans to terminate the dealers as part of the agency switch. However, Justice Matthews ruled in favor of Honda, stating that the carmaker had not violated Australian Consumer Law by engaging in misleading or deceptive conduct or unconscionable conduct.
Although Honda Australia was cleared of legal violations, Justice Matthews agreed with Astoria’s financial estimates of over $10 million in damages. This ruling will require Honda to pay significant compensation to Astoria Brighton.
Honda Australia acknowledged the court’s judgment and its responsibility to compensate Astoria Brighton. The carmaker expressed its commitment to supporting its Honda Centres and customers moving forward. However, the final ruling on the damages is yet to be determined.
This lawsuit is part of a series of legal actions stemming from Honda Australia’s transition to an agency model. In a separate case, Honda Australia was ordered to pay $6 million in penalties for making false or misleading representations to customers of Astoria, Tynan, and Burswood.
Despite facing legal challenges and recording its two weakest sales years since the switch, Honda Australia remains committed to the agency model.
- Honda Australia’s switch to an agency model did not violate Australian Consumer Law
- Former dealers Brighton Automotive Holdings and Tynan Motors took Honda Australia to court over compensation
- Justice Matthews ruled in favor of Honda Australia but agreed with Brighton Automotive’s claim of over $10 million in damages
Honda Australia finds itself in a legal predicament as it faces the prospect of paying almost $10 million in damages to a former dealer. While the carmaker was cleared of breaching Australian Consumer Law, it will still have to compensate Brighton Automotive Holdings. The ongoing lawsuit highlights the challenges Honda Australia has faced in implementing its agency model. Will this setback impact the future of the carmaker in Australia?
