The Australian Automotive Dealer Association (AADA) is urging regulators to stamp out the practice of falsely reporting vehicle sales figures.
This potentially harms consumers, investors and dealers, and distorts key data that is relied upon across the economy.
It was reported that the U.S. Securities and Exchange Commission (SEC) opened an investigation into BMW, and September last year saw Fiat Chrysler agreeing to pay the SEC $40 million over claims it inflated sales figures.
“The practice of reporting false new car sales figures has been highlighted recently in the United States and it is a practice that has been endemic in Australia for some time,” AADA chief executive James Voortman says.
“It potentially leaves consumers vulnerable regarding the start time of their warranty; it misleads investors by overstating the health of the Australian automotive industry, and it puts the squeeze on dealers who are currently experiencing some of the most challenging market conditions in decades,” Voortman says.
Voortman says it is time for the Australian Securities and Investments Commission (ASIC) to follow the U.S. regulators and reprimand those manufacturers that push fake sales numbers.
He commends FCAI on its work to continually improve the integrity of the VFACTs data and welcomes moves by Australian car manufacturers to improve sales reporting practices.
However, he has called on the automotive industry to take quick action or risk the regulator forcing compliance through harsh financial penalties.
“Requiring a vehicle to be registered before it is sold is an important step, but it is only a first step and the whole industry should be working together to ensure that cars are only reported as sold when a genuine customer takes delivery of the car.
Voortman explains that dealers are compelled to comply with manufacturer directives, as they fear being denied important incentive payments, or losing their franchise agreement.
“These practices also undermine the credibility of new car sales numbers reported through the VFACTs product, which is used by investors, economists and the Government in assessing the health of the industry and the broader economy and then making key decisions off the back of that information.”
How does false automotive sales data impact us?
- Consumers are left vulnerable regarding the start time of their warranty
- A vehicle is the second largest investment a household makes, after buying a home, and is therefore a key indicator of consumer confidence and Australia’s economic health
- It can influence important decisions related to the economy, like interest rates that impact all households
“Today, we see the twenty-first consecutive month in which new car sales have contracted – surely now is the time to bring the focus back to profitability to ensure a sustainable future for the industry,” Voortman says.
A longer version of this story will be available in this month’s AutoTalk magazine.
