Honda first became aware of a problem in this sale system last year, when some dealers complained about Saccucci Honda's dealership in Middletown selling the service contracts online at cost. This caused consumers believe that warranties sold in-house were overpriced. The dealership sold about 250 Honda extended service a month and, according to Autonews, earned $60,000 to $95,000 a quarter in factory bonus money based on volume.
The decision to pull the plug on this type of sale was taken in July, but it was only this month when Saccucci, who relied heavily on this system to sell, was notified. According to Judge Mary Lisi, "this is not a situation where Honda is threatening to curtail Saccucci's bloodline - its supply of automobiles - a primary consideration of the dealer act."
Carol Saccucci, one of the daughters of owner Cora Saccucci, said the ruling is very dangerous for all dealerships. "The judge found the Dealers' Day in Court Act only applies to the supply of cars, not anything else we sell. We feel we have a good chance on appeal." Their case will be taken to the US Court of Appeals later this month.
The Saccuccis will be backed by the National Automobile Dealers Association. According to Jim Moors, NADA attorney, the decision made by the judge was "too narrow" as it covers "car selling and not other selling activities."
Honda on the other hand says the ban is only temporary, as it will be working on creating a solution for the almost a dozen dealers across the US selling the contracts online.
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