California auto dealers filed a lawsuit against Honda’s U.S. division and Sony Honda Mobility, saying their Afeela brand vehicle sales violate state franchise law.

The action follows a cease-and-desist letter filed by the California New Car Dealers Association in May that demanded an end to direct sales of vehicles.

Filed in Los Angeles County Superior Court, the suit accuses the partner companies of illegally bypassing Honda and Acura auto dealerships to sell vehicles directly to consumers. It cites a 2023 state law barring automakers from competing with their auto dealers via affiliated brands.

Sony Honda Mobility is a joint venture formed between Honda and Sony Group Corp. in 2022 to sell “high-value-added” electric vehicles and “provide services for mobility.” The venture is accepting refundable $200 reservations for the Afeela 1 car.

The vehicle starts at a base price of $89,900. A “Signature” trim is available for $102,900.

"This is a direct attack on the 161 franchised Honda and Acura dealers in California that have been loyal partners in building the brand's reputation and success for decades," said CNCDA President Brian Maas in a press release announcing the lawsuit.

Maas said the venture tried to stop passage of the state law when it was being considered in the California legislature. 

"They are now knowingly violating the law, hoping they won't be caught,” he said. “It's our job to protect the dealers directly being harmed from their actions."

In the lawsuit, the dealers association aims for an “immediate” stop to Afeela sales and ultimate enforcement of the franchise law.

"By cutting dealers out, they're stripping vital consumer protections like local service support, transparent pricing, and warranty assistance, all while undermining the millions these dealers have invested in their facilities, employees, and communities,” Maas said. “We will not allow a manufacturer to turn its back on the very network that made it profitable in the first place." 

The CNCDA has also sued Volkswagen affiliate Scout for its direct auto sales.

LEARN MORE: A Real Purchase