Regulations , , ,

Rod Sims

DEALERS may soon have their own franchise code of conduct under a proposal by the Australian Automotive Dealers Association (AADA) that has been presented to the industry’s peak consumer watchdog.

The move comes as the Australian Competition and Consumer Commission (ACCC) has turned its attention to the sometimes intimidating actions taken by manufacturers to dealers when asked to solve customer complaints.

The change in focus by the regulator came during the AADA convention in September. This has led to it calling on the ACCC to address the relationship between the car-maker (OEM) and the dealer, as part of the ACCC’s study into new-car retailing.

AADA CEO David Blackhall said that his association is now calling for an automotive industry code to lay bare the dysfunctional relationship between OEMs and dealers, and look at the impediments in the industry to a quick resolution to customer complaints under the Australian Consumer Law legislation.

Mr Blackhall said that the AADA had provided a “supplementary submission” to the ACCC on the key elements of the dealers’ abilities to remedy vehicle faults under the Australian Consumer Law.

David Blackhall

He said that the AADA’s ultimate goal is for the legislators to accept that the automotive industry needs its own franchising code.

“It should be an industry code for the automotive industry,” he told GoAutoNews Premium.

“We are not a Wendy’s franchise or a McDonald’s franchise. We have unique requirements.”

One of the triggers for the change of tack by the ACCC has been the forceful nature of OEMs when instructing franchised dealers to deal with warranty problems, Mr Blackhall told GoAutoNews Premium.

“There have been occasions where the dealer has gone to the OEM and outlined problems with a vehicle and the OEM has steadfastly refused to assist,” he said.

“We are aware that dealers have been instructed – under fear of losing their franchise – not to repair or replace the vehicle even though that is a breach of the Australian Consumer Law.

“The dealer has also been instructed that if the car is to be repaired, the customer will receive a loan car at the expense of the dealer – not the OEM.

“The dealer cannot afford to replace a failed component because in many cases – such as an engine or transmission – the cost for a new part is prohibitive.

“Then, if the car cannot be repaired, the dealer has to buy the car back, again at the dealer’s expense.”

Mr Blackhall said this type of problem between the OEM and the dealer usually put the focus on the dealer – because it has become the public face of the problem – when in fact it should be the OEM that fixes a car that it failed to build correctly.

Now the ACCC aims to investigate this fragmented relationship between dealer and OEM, particularly in high-profile incidents such as Volkswagen’s TSI engine and transmission problems, Ford’s troublesome dual-clutch transmission and Jeep’s electrical issues.

Mr Blackhall said the intention was not “to go to war” with the OEMs but “we will if we have to”.

“We don’t think we will have to if the reasons for the arguments we present are sufficiently strong,” he said.

For the AADA’s full supplementary submission … Click here

By Neil Dowling

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