The Australian Automotive Dealer Association (AADA) has expressed disappointment with the Government’s draft automotive franchising regulations.
“Australia’s car dealers need strong regulatory protections similar to those in force in other advanced countries. Unfortunately, the regulations as drafted will have very little effect on the status quo,” AADA chief executive James Voortman says.
The regulations intend to address the major power imbalance between new car dealers and offshore vehicle manufacturers but fall well short and will continue to leave Australian dealers vulnerable, says the AADA.
“Global car manufacturers are using Australia’s lax regulatory regime to squeeze their dealers and they see our market as an ideal place where they can experiment with alternative distribution models, usually at the expense of dealers. Such behaviour is simply not possible in a country like the United States which does have strong automotive franchise laws.”
Voortman says it’s important for these regulations are bolstered before they are finalised.
“The biggest factor influencing the power imbalance is insecurity of tenure for dealers. It was identified by the ACCC as an issue of concern in its retail market study, but to date it has been left out of the draft regulations.”
Dealers in Australia have invested millions of dollars in facilities, only to be given a one-year agreement.
The regulations also do not cover the issues of dealers being denied warranty payments and manufacturers pressuring dealers to dismiss ACL claims from consumers.
The AADA believes it is crucial that these draft regulations are strengthened before they are finalised and will be raising its concerns directly through the consultation process.
