Words matter: Honda Australia pays $6m for misleading statements
1 mins reading time
Continuing its focus on the motor vehicle industry, the ACCC has also recently been successful against Honda Australia (Honda), with the Federal Court finding that Honda engaged in misleading and deceptive conduct, and made false or misleading representations to customers.
What were the misleading statements in this case?
In 2021, Honda re-structured its Australian operations from a franchising model to an agency model for new vehicles. This is similar to what Mercedes Benz has also done in the Australian marketplace. As part of the restructure, Honda terminated some of its franchise agreements with authorised dealers, including the dealerships of Astoria, Tynan and Burswood.
In various phone calls, emails and vehicle service reminder text messages to Astoria, Tynan and Burswood customers, Honda made statements including:
“…Your previous service dealer has closed so please find your nearest Honda Service Centre here…”
The Federal Court accepted that this type of statement was variously false, misleading and deceptive to customers. It was NOT the case that the dealerships had closed or were closing. Rather, the Astoria, Tynan and Burswood dealerships continued to operate as independent service centres to service and repair vehicles (including Honda vehicles) – just not under the authorised dealership model.
Why did the ACCC take action?
The ACCC took action against Honda because it considered that Honda’s statements misled consumers and financially harmed the dealerships. Astoria and Tynan had each been authorised Honda dealerships for approximately 50 years, and the $6M penalty handed down to Honda likely took that into account.
Key takeaways
It isn’t just silly semantics – businesses are reminded that “words matter” – you need to take care to make sure your statements and representations are truthful and accurate.
If you would like legal advice regarding specific wording for your business, Macpherson Kelley has specific expertise in the Motor Dealer industry. Contact our lawyers for industry specific advice.
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Words matter: Honda Australia pays $6m for misleading statements
Continuing its focus on the motor vehicle industry, the ACCC has also recently been successful against Honda Australia (Honda), with the Federal Court finding that Honda engaged in misleading and deceptive conduct, and made false or misleading representations to customers.
What were the misleading statements in this case?
In 2021, Honda re-structured its Australian operations from a franchising model to an agency model for new vehicles. This is similar to what Mercedes Benz has also done in the Australian marketplace. As part of the restructure, Honda terminated some of its franchise agreements with authorised dealers, including the dealerships of Astoria, Tynan and Burswood.
In various phone calls, emails and vehicle service reminder text messages to Astoria, Tynan and Burswood customers, Honda made statements including:
“…Your previous service dealer has closed so please find your nearest Honda Service Centre here…”
The Federal Court accepted that this type of statement was variously false, misleading and deceptive to customers. It was NOT the case that the dealerships had closed or were closing. Rather, the Astoria, Tynan and Burswood dealerships continued to operate as independent service centres to service and repair vehicles (including Honda vehicles) – just not under the authorised dealership model.
Why did the ACCC take action?
The ACCC took action against Honda because it considered that Honda’s statements misled consumers and financially harmed the dealerships. Astoria and Tynan had each been authorised Honda dealerships for approximately 50 years, and the $6M penalty handed down to Honda likely took that into account.
Key takeaways
It isn’t just silly semantics – businesses are reminded that “words matter” – you need to take care to make sure your statements and representations are truthful and accurate.
If you would like legal advice regarding specific wording for your business, Macpherson Kelley has specific expertise in the Motor Dealer industry. Contact our lawyers for industry specific advice.