A California judge will allow the California New Car Dealers Association’s (CNCDA) lawsuit against American Honda and Sony Honda Mobility to move forward, overruling the automakers’ motion to dismiss.
Driving the news: In an order issued March 9, the Los Angeles County Superior Court overruled several demurrers, or objections, filed by the companies.
The CNCDA, which filed the case in August 2025, alleges the companies are violating California franchise law by selling Afeela-brand vehicles directly to consumers instead of through Honda and Acura dealerships.
Additionally, the court found that Sony Honda’s $200 “Reservation Agreement” represents the first step toward purchasing an Afeela vehicle and ruled that Sony Honda is sufficiently affiliated with American Honda for the lawsuit to proceed.
For context: CNCDA argues the companies are engaging in unfair competition and seeks declaratory and injunctive relief to stop direct-to-consumer Afeela sales. With the March 3 ruling, the case can move into discovery.
Assembly Bill 473, enacted in 2023, prohibits automakers from using affiliated brands to compete with franchised dealers.
Despite that, CNCDA says Sony Honda is still accepting deposits for Afeela vehicles online and plans to deliver vehicles directly to California consumers in the second half of 2026.
What they’re saying: CNCDA President Brian Maas said in a release that franchised dealers are loyal business partners for Honda and Acura.
"By precluding them from selling new and exciting vehicles with the latest technologies, Sony Honda is essentially turning its back on their Honda and Acura dealer partners and the thousands of people they employ,” Maas said. “Not to mention, it's illegal."
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Worth noting: Sony Honda Mobility of America on March 5 announced the grand opening of its Afeela Studio & Delivery Hub Fremont, in northern California.
Sony Honda said the hub “will function as a dedicated delivery center where customers can take delivery of their AFEELA 1 through a personalized, premium experience designed to mark the beginning of ownership,” the company said in a release.
The March 14 ribbon-cutting ceremony is a private event for company executives, local officials, and customers who have Afeela 1 reservations.
Zooming out: Monday’s ruling about Sony Honda comes about one week after two dealers, on behalf of their dealerships, filed a class-action lawsuit against Volkswagen and Scout regarding its plan to sell directly to consumers. That case was the third filed against Volkswagen and/or Scout.
The CNCDA also filed a suit against Volkswagen in April 2024. The automakers filed a motion to dismiss in that case as well, and the plaintiffs responded. Now the parties are waiting on a ruling from the federal court.
Looking ahead: Dealers and dealer associations fighting manufacturers in court is generally rare, but with many seeing direct-to-customer sales as a direct threat to the franchise system, perhaps we’ll see more. Until then, dealers and OEMs will likely closely monitor the outcomes of all pending and future litigation.
