We carry out a large scale coupled-channels calculations in order to discuss the effect of non-collective excitations on heavy-ion fusion and quasi-elastic scattering at subbarrier energies. To this end, we take into account all the states in 208Pb below 7 MeV, which were previously identified with a high resolution proton inelastic scattering measurement. Our calculations indicate that the energy dependence of the fusion and quasi-elastic cross sections are not altered much due to the non-collective coupling, although the peak structure in the barrier distributions is slightly smeared. We also show that our calculations well reproduce the energy dependence of the Q-value distribution for backward quasi-elastic scattering.