Honda Trying to Halt Sales of Discounted Service Contracts
Savvy car buyers know that they may save money by buying an extended warranty (service contract) backed by a manufacturer from any authorized dealer. A NY Times article published August 2, 2008, on the subject of extended warranties features a Rhode Island Honda dealer, Saccucci Auto Group, that has made a business of selling discounted Honda Care service contracts over the Internet (www.myhondawarranty.com). According to Saccucci Auto Group, Honda formerly encouraged its dealers to sell the contracts over the Internet. However, in February 2008, Honda announced a new policy banning Internet sales to protect its dealers' profit margins.
Saccucci Auto Group sued Honda in a state court and a judge temporarily enjoined Honda from enforcing the new policy. Honda then removed the case to the federal district court. On August 25, 2008, the federal court will hold a hearing on the dealer's request for an injunction. Right now, if a California owner tries to buy a Honda Care extended contract, a message comes back saying Saccucci is temporarily not selling contracts in California while it researches California law. The dealer is concerned about a California law that may restrict dealer operations to a fixed location. For the sake of competition and car buyers, let us hope Saccucci wins this one!
