Honda Australia to be sued by dealers following switch to fixed prices – report

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The auditing firm accused of skewing numbers for Mercedes-Benz before it switched to non-negotiable, fixed prices is now having its methods called into question in a strikingly similar case involving Honda Australia and its roll-out of the same sales model.

Honda Australia is facing a lawsuit following its decision to move from a traditional dealership model to selling new cars at non-negotiable fixed prices.

Since 1 July 2021, new Honda vehicles in Australia have been sold under a so-called ‘agency model’, where Honda Australia head office owns all stock of new cars, and showrooms are paid a set fee to sell and deliver them to customers at prices which cannot be negotiated by the customer.

However, according to a recent report from the Australian Financial Review, dealerships are now suing Honda Australia for damages – claiming their long-term agreements had been breached – while also calling into question the methods used by Honda in determining compensation.

It follows Mercedes-Benz’s victory in a lawsuit brought against it by many of its dealerships over its roll-out of a similar fixed-price sales model six months after Honda Australia, alleging they were misled and entitled to compensation by the German car maker.

The AFR reports Honda Australia contracted international accounting firm Deloitte to consult on the switch-over – but dealers are now accusing Deloitte of using confidential sales information against them to determine the lowest compensation offers.

Many dealerships used Deloitte’s services for auditing and taxation, and allege the company used its access to years’ worth of internal data to help Honda Australia determine payout amounts – with some alleging compensation was unfairly based on their worst sales performance, rather than the average.

Mercedes-Benz followed Honda in introducing a fixed-price ‘agency’ sales model in Australia from January 2022, forcing customers to purchase directly from the brand’s website – or its showrooms, which became “selling agents” for the car maker – with no ability to negotiate.

Earlier reports claim a Deloitte employee had admitted to using incorrect information at the time, which was then used in presentations to falsely show how much better off financially the dealerships would be.

It’s believed Deloitte partner Lee Peters admitted under cross-examination in the Mercedes-Benz case that the firm had used data from 2018 – one of the worst-performing years for the German car maker in recent memory – in an effort to spin the numbers as a positive move for dealerships.

However, the company denies allegations against it in the Honda case – despite striking similarities in both scenarios.

According to the report, three partners from Deloitte’s local automotive team left the business for a competitor in 2021 due to the alleged conflict of interest.

“We are unable to comment on the specific circumstances or details regarding individual dealers, claims or any reference to legal action,” a spokesperson for Honda Australia told Drive.

“Since introducing the new business model two years ago, our Honda Centres and customers have responded positively to the new Honda Experience.”

Ben Zachariah is an experienced writer and motoring journalist from Melbourne, having worked in the automotive industry for more than 15 years. Ben was previously an interstate truck driver and completed his MBA in Finance in early 2021. He is considered an expert in the area of classic car investment.

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