The Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber has issued a media release saying some car dealers want to immune themselves from change even when customers are crying out for new ways to do business.
On behalf of the dealer group which is taking $650 million legal action against the agency implementation by Mercedes-Benz, Australian Automotive Dealers Association (AADA) chief executive James Voortman issued a retaliatory media statement calling the FCAI release obfuscate and ‘fake news’.
Weber says the FCAI believed that Australia had extensive competition and franchising regulations and further Government intrusion into the marketplace would stifle the industry’s capacity to innovate to meet the changing needs of the Australian consumer.
“The agency model is one example that enables innovation and evolution and provides choice and competition to today’s consumers, regardless of where they live, who do not want the same car buying methods and experience their parents and grandparents had,” Weber says.
“Even the Federal Government acknowledged the importance of the agency model as an option by including it in the franchising code, which was implemented in July 2021.
“It introduces consistent pricing to Australia’s new car market and retains competition between car brands. Australia has 52 brands and more coming – that is the competition which drives down prices for consumers.
“This model will for the first time enable regional car buyers to buy any model through their local dealership and not have their choice limited by their location,” he says.
AADA responds robustly
The AADA has responded robustly to the FCAI media release which it maintains was issued on behalf of Mercedes-Benz.
The AADA says the Federal Court of Australia legal action launched by the franchise dealers against Mercedes-Benz seeks to prevent the German manufacturer from forcing major changes which will decimate the local industry.
“Mercedes-Benz in Stuttgart talks a lot about transparency but this is nothing more than obfuscation,” AADA chief executive James Voortman says.
“Far from delivering benefits to consumers, the switch proposed by Mercedes-Benz is driven by a desire to appropriate more than $650 million in the value of businesses built up by dealers without a cent of compensation.
“This is ‘fake news’ from the FCAI claiming that consumers will ultimately benefit from these changes. The recent experience from Honda shows unequivocally that prices will go up, competition will go down. In the case of Honda, consumers have voted with their feet and it is the only major car brand experiencing a decrease in sales in the last quarter.
“In fact, recent industry data demonstrates Honda is the only top 20 brand in Australia to have experienced a decline in sales. Where in any industry in the world has there ever been an example of monopoly pricing delivering a better consumer outcome?
“Mercedes-Benz is perfectly entitled to change its business model over time, but in doing so it is not entitled to steal the hundreds of millions of dollars of value built up over generations by predominantly family-owned businesses,” Voortman says.
