Honda Australia in hot water: Fined for deceptive conduct

The consumer law regulator has dealt Honda Australia a substantial penalty for misleading consumers during the fallout of their special dealership-culling operation. If you’re buying a new car, here’s why naughty corporate conduct matters…

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Honda has received an official kick in the corporate account, 6 million of them in fact, for being a grubby incompetent teller of broad-spectrum consumer untruths.

This orbits their somewhat underhanded recent dealer boning activities >>.

Honda Australia’s brand commercial destruction down under is pretty much a fate accompli at this point, so that's working out really well.

Keep reading to find out why this matters if you’re in the market for a new medium sedan, or a small or medium size SUV.

In about April of 2022, the Australian Competition and Consumer Commission (ACCC) managed to sue Honda in federal court on the basis that the inventor of VTEC was a misleading untruth teller.

A chap named Justice Nathan Moshinski has successfully imposed a $6 million penalty in conjunction with a high profile deterrence message.

So exactly what was Honda's big breach, sufficient enough to motivate the ACCC to wake up and slice Honda up with its lightsabre in this way?

Well, back when Honda's broad-spectrum dealer boning ceremony was well underway, Honda stalked the living daylights out of its customers and told them the Astoria (Brighton), Tynan and Burwood dealers either would or had closed, and would thus no longer service Honda vehicles.

Unfortunately, what they said was - and there's really no other term appropriate for this that I can think of - it was fucked. Flat out fucked. By ‘stalked’, incidentally I mean they sent emails and text messages and made phone calls. This delivery of these untruths in this manner went on for months upon months.

If an estranged husband or a peaceful Woodside protester comported themself in this manner, there would doubtless be an AVO.

This was pretty widespread stalking by Honda to more than 1000 customers in this undignified, misrepresentative and deceptive way. Honda Australia deprived consumers of the opportunity to make an informed choice about their options for servicing their vehicle, it also caused likely financial loss to the dealerships by the false claim they were closing or had closed.

The substantial penalty sends a strong message to all businesses about the consequences for making misleading statements to consumers

That's ACCC commissioner Liza Carver, and Justice Moshinski agreed, broadly, from the bench saying Honda had been rather naughty in the context of consumer law which, apparently shouldn't be regarded as optional even if you're a carmaker.

Mr Moshinski said these actions:

caused a loss to the dealers by way of loss of business

The not-so-subtle distinction here being that Honda was upending the dealers’ franchise agreements, but the dealerships were not in fact closing and they were, of course, free to service Hondas independently after being boned.

Although the contraventions were not deliberate, they were nevertheless serious. The number of contraventions is large and took place over a period of months

Justice Marshinski in federal court there. “Not deliberate” is terminology I've got a real problem with here, and it's not for what you think.

I'm sure they were not deliberate, but unfortunately therefore, this absence of intent to deceive can only mean one thing: that they were grossly incompetent. As in, negligently, ridiculously bad at informing their customers about exactly what was going on. Brain-bendingly shit at communicating such a simple concept, in my assessment.

This is not some refugee trying to start a small business and filling in some official form all wrong. This is a multinational company with a wholly-owned subsidiary in Australia; it's got a boardroom and a communications team and lawyers and it's knee-deep in managers. To me, this is just a classic epicurean paradox.

This appears to be exactly that. It’s either malice or incompetence in play, and I really don't think it's malice. I doubt Honda intended to lie. In Australia, Honda is just dependably, reliably incompetent >> That’s why the brand is presently disappearing in a cloud of incompetence and we live in a country where competency is getting rarer.

I would argue if we don't act now, breathtaking incompetence is going to be the new median setting and competence will become what excellence was.

The brand that made this...

made a Civic cost $46,000...

and a small SUV hybrid cost $47K

Almost exactly five years ago back in 2018, Honda Australia sold 51,52 new vehicles, and they're on track, if that's the right term, to sell 13,300 this year. In round figures, that's a 75 per cent reduction in sales. Honda sales have nose-dived >>

Another way of looking at this is that it's a properly biblical apocalypse, commercially speaking. It's roughly 38,000 vehicles which they sold in 2018 that they're just not going to sell in 2023. If, at an average of 30 grand a pop, that's a reduction in sales revenue of more than $1 billion, and if there's a local margin of, I don't know just pulling out a number like 5 per cent on those Honda vehicle sales, that's about $60 million in ‘profit’ that they're just not making.

One of the primary causes of this trajectory included, but isn’t limited to, fixing the new Civic at a completely unrealistic price >> and then doubling down on that action by making the HR-V small SUV financially unattainable >>.

But that's just for one year, for 2023. This is an ongoing trend in sales still falling for Honda. In 2023, they’re down roughly 8 per cent on 2022 so far, with no end in sight. They can no longer blame the pandemic, either. That 60 million bucks kind of puts today's $6 million federal court fine in perspective, does it not?

Of course, if I were the current Honda Australia managing director of the poisoned chalice, I would not be using this information in that fateful conference call back to Minato.

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