Toyota Australia earlier undermined Honda’s position with the National Toyota Dealers Association and Toyota Australia, confirming to the Senate Committee that both parties within Toyota have a written agreement legally establishing the rules for sharing dealer customer data – which they admitted was the result of a hard-fought negotiation over a period of years.
The agreement covers sharing data with Toyota Australia and with other Toyota dealers.
The issue has become important to Senators who are clearly unimpressed with Honda insisting that the dealers it is sacking in the lead-up to its move to an agency sales model must hand over their customer data to the remaining Honda dealers and that they will not get any payment for its value.
The matter came to a head a week ago when the owners and operators of Astoria Honda Brighton, in Melbourne’s affluent inner south, told the Senate Committee that it had 34,000 customers on its database. These customers in the database generated 120 new car sales a month during 2019 and generated service sales that resulted in Astoria Honda Brighton being the largest seller of Honda parts in Australia for the past 10 years.
Astoria Honda in 2019 sold more Hondas than any other Honda dealer and has just over six months left to trade in Honda vehicles.
Senators were told by Mark Avis and Ron Klein from Astoria that Honda was insisting that they would have to sign over the customer database to Honda which would presumably be handed on to the appointed agency dealers, which would be moving into Astoria’s market territory from June 1 next year.
Mr Avis told Senators that this data and the territory they have developed over more than 50 years was to be ‘gifted’ to the incoming dealer and was the equivalent of handing over a ‘goldmine’ without payment.
Senators indicated that they could not understand why Honda was not placing any value on the customer database in the settlement proposed with Honda’s 28 exiting dealers.
In the most recent hearing the incoming chairman of the National Toyota Dealers Association Brett Mills told Senators: “Some years ago Toyota and the national dealer council signed a data-sharing agreement so that we could advance our brand and our ability to service the guest but also protect the integrity of data in the recognition that we are all independently owned.
“The process to get that data-sharing agreement to the point of being signed went on for years between the dealer council and Toyota and is a great example of the way that we work together with Toyota; to come up with what data that we believed as dealers we were happy not only to move to the manufacturer but to share between dealers in order to give customers a better experience.
“It actually puts in place a set of rules and guidelines around what needs to happen should further data be requested to be shared with the manufacturer. It means that we are able, as a brand, to better service the customer, because we need data to do that, but by the same token, the data-sharing agreement, for example, protects the integrity of dealers’ data. I think it’s a good balance.”
Mr Mills told Senator Deborah O’Neill that “data is important, and it’s only becoming more important. I think the way that the dealers and Toyota have gone about the data-sharing agreement recognises that fact very much”.
Later in the hearing Senator O’Neill was questioning Honda Australia director Stephen Collins about why Honda was not compensating exiting dealers for their data when she asked: “Does Honda Australia acknowledge the agency model and planned agreement forces dealers to transfer their customer data ownership to Honda for no compensation?
Mr Collins: Senator, our view is that the data is jointly owned between us and the dealer.
Senator O’NEILL: Do you have an agreement to that end? Is that documented in any way?
Mr Collins: I don’t think it’s documented specifically within our dealer agreement but that’s certainly our view.
Senator O’NEILL: So you’ve just asserted your right to data, but there is no formal agreement of the kind that we heard about from Toyota with their dealers?
Mr Collins: Our view is that the data is jointly owned.
Senator O’NEILL: That’s your view. There is no formal agreement to that end. That’s just your view, is that correct?
Mr Collins: We have no formal data-sharing agreement.
Senator O’NEILL: Does Honda Australia believe that customer data is worthless? Of no value?
Mr Collins: I would say that data clearly has some value. It is very, very clear within our agreement that we believe that the data is jointly owned. So …
Senator O’NEILL: Which agreement are you referring to there, Mr Collins? Because you just told me that you don’t have a data agreement, which was hard negotiated by the evidence of the National Toyota Dealers Association and Toyota Australia. They worked very, very hard to come to an understanding of this incredibly valuable asset that they both wanted to share, which is customer data. Honda never established a formal agreement with any of the Honda dealers around the sharing of data. Is that correct, Mr Collins?
Mr Collins: Separate to the existing dealer agreement, that is correct.
Senator O’NEILL: But, in the shift of your business model from a dealer network to an agency model, you are subsuming all of that data and claiming it as your own for redistribution at your discretion. Is that correct, Mr Collins?
Mr Collins: Senator, we believe it’s jointly owned.
Senator O’NEILL: You believe it is, but you have no documentation and you don’t have formal agreement from your dealers?
Mr Collins: Our view is that it’s jointly owned. We do not have a separate agreement, as I’ve said. But we believe it’s jointly owned.
Senator O’NEILL: If I believe that my neighbour’s car should be mine, I don’t have a right to take it. It’s theirs, they own it, they have value, they use it. If a car dealership has data and it’s of so little value that you are not willing to pay for it, why are you taking their data, Mr Collins?
Mr Collins: If this is in reference particularly to the compensation package, the principle of our compensation package is to put the dealer in the same position they would have been in had the period of the contract been continued until the end. Our view is that that’s a component of loss of profit, as well as rent, capex and exit cost, not customer data.
Senator O’NEILL: Your contention is the data is jointly owned even though there is no agreement. How much compensation did you give people for taking their data?
Mr Collins: I’ve already outlined our compensation components, and it does not include data.
Senator O’NEILL: Could you say that again, Mr Collins?
Mr Collins: I’ve just outlined the components, the high-level components of our compensation package, and there’s no specific component of customer data. It’s with reference to loss of profits, capex, a rental component, as well as wind-up costs et cetera.
Senator O’NEILL: So, effectively, you want their data, you’re taking their data, you claim it’s jointly owned, but it’s of no dollar value. Otherwise you would be compensating them, Mr Collins.
Mr Collins: We believe it’s jointly owned, Senator. I’m sorry to keep repeating myself but that’s our view.
Senator O’NEILL: I’m sure the Honda dealer is a lot more sorry that you keep repeating that.
Senator Loiuse Pratt : Can I ask, if it’s jointly owned and you want to assume entire ownership of it, does that not mean it should be part of a compensation package?
Mr Collins: Our view is the compensation package which we have provided essentially puts the dealer in the same position had the contract been seen through to its end.
By John Mellor