The California New Car Dealers Association (CNCDA) issued a cease-and-desist to American Honda Motor Co. and Sony Honda Mobility of America ordering them to stop direct-to-consumer sales of new Afeela brand vehicles.
The CNCDA alleges that Honda is violating state law by cutting out dealers from the sales equation.
“California law is crystal clear. Automakers and their affiliates are not allowed to compete with their own franchised dealers through direct sales,” said Brian Maas, CNCDA President, in an official press release. “Sony Honda’s rollout of selling Afeela vehicles directly to consumers is an unlawful effort to circumvent the state’s protections for franchisees.”
Afeela
Afeela is a new joint venture between Honda and Sony to bring a luxury electric vehicle to market. The first model, the Afeela 1, is expected to start production later this year. It will be built at Honda’s Ohio facility and be available in 2026. The four-door sedan is being pushed as a cutting edge, high-tech vehicle, complete with AI integrations, driver assistance and a robust infotainment system.
“We are taking a direct consumer approach to simplify the customer experience and enhance your satisfaction,” said Shugo Yamaguchi, CEO of Sony Honda Mobility of America. “All processes from reservation to sales are taken care of through our website.”
The brand is currently marketing and taking deposits for vehicles in California. They claim that Sony Honda Mobility of America is a separate company entirely from American Honda and thus affiliate restrictions do not apply. CNCDA does not agree and is currently demanding an immediate halt to all vehicle reservations and advertising.
Volkswagen & Scout
This is not the first automaker the CNCDA has taken legal action against as they issued a similar cease-and-desist to Volkswagen back in January over sales through its affiliate Scout.
“Volkswagen’s direct sales via its Scout brand represent a direct threat to the jobs, investments, and consumer protections California’s franchise laws are designed to safeguard,” said Maas. “We strongly encourage Volkswagen to heed our call to abide by California law and immediately stop offering Scout vehicles directly to consumers without using their business partner local dealers.”
Direct Sales
When Honda and Sony first announced their collaboration in January it was met with immediate push back from the National Automobile Dealers Association.
“Honda should understand that any misguided attempt to bypass or undercut its U.S. dealers will be challenged in statehouses and courthouses across the country – with NADA’s full support,” said NADA President and CEO Mike Stanton in a statement. “As we have communicated to Honda on numerous occasions…the franchise system is the best, most consumer-friendly, and most cost-effective way to sell and service new vehicles and deliver the customer experience that today’s marketplace demands.”
The focus of the direct-to-consumer fight is on California Vehicle Code section 11713.3(0) which “prohibits automobile manufacturers, distributors, and their affiliates from competing with their own vehicle franchisees.” Since Sony Honda Mobility of America could be considered a Honda affiliate under California law, CNCDA believes their sales are in direct violation of Assembly Bill 473. The bill was amended in 2023 to prohibit automakers from establishing affiliate brands to compete with California dealers by directly selling vehicles. Honda opposed the amendment during its legislative process.
“CNCDA remains steadfast in ensuring California law is followed and franchised dealers are protected,” the association said in a statement. “The association is prepared to take legal action should this letter not result in the immediate cessation of direct sales of Afeela vehicles by SHMA and American Honda.”
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