Rod Sims

THE Australian Competition and Consumer Commission’s (ACCC) draft report based on the New Car Retailing Industry Market Study was released today and threatens to change the landscape for dealers in terms of warranty practice and increased competition from independent repairers.

The ACCC’s key observations from this market study are:

• car manufacturers’ complaints handling systems and policies are preventing consumers from obtaining the remedies to which they are entitled under the Australian Consumer Law (ACL).
• a mandatory scheme should be introduced for car manufacturers to share technical information with independent repairers.
• buyers of new cars need more accurate information about new cars’ fuel consumption and emissions.
  

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According to ACCC chairman Rod Sims, “the ACCC is deeply concerned about the level of non-compliance with the Australian Consumer Law in the new car industry”.

Mr Sims also maintains that car manufacturers should be required to share new cars’ technical information with independent repairers.

“For new cars to be properly repaired and serviced, independent repairers need access to electronic information and data produced by car manufacturers,” Mr Sims said.

The Australian Automotive Dealer Association (AADA) has a number of concerns with the ACCC’s draft report and will be sharing those with its members later today.

David Blackhall

CEO David Blackhall said it was premature to provide a meaningful response to the ACCC report especially in regard to proposed changes to entitle consumers to get a refund or replacement vehicle within a set period if time if their new car doesn’t work.

“What I can say is that the draft appears to offer some hope in that dealers can often be caught between some OEM repair policies and the ACL obligations,” he said.

Mr Blackhall said it was disappointing to see misinformation in the media about skimpy or flawed data and profit rip-offs considering the strong and transparent working relationship we have had with ACCC staff during the development of this report.

GoAutoNews Premium spoke to Mr Sims and asked him which of these concerns are the most important and why.

“I can’t separate two I’m afraid,” he said. “I know that’s cheating, but I think the two biggest ones are the fact that new car dealers are dealing with their consumers through the prism of warranties rather than consumer guarantees, and the big worry there is, where you have systemic problems with the cars, consumers are facing continuing repairs rather than the ability to get a refund or a replacement, and I think that’s a big issue.

“The second one, of course, is the fact that the independent repairers can’t get access to the data to repair vehicles and provide effective competition to dealers outlets, and of course dealer outlets are making huge margins on their servicing. So those are the two main issues.”

GoAutoNews Premium queried Mr Sims over liability in the event that an independent repairer, through lack of training or any other reasons, was to damage an expensive modern car.

“Well, I think I’ve got to make two comments on that,” he said. “One is that it is just not clear in this presumption that independent repairers are likely to have inexperienced technicians any more than a dealer, that’s certainly not the experience that we hear about or the feedback we get. So I’m not sure the presumption underlying the question is a good one.

“But of course if someone does a bad job repairing your car, or repairing your washing machine or doing anything else, the dodgy repairer is the one who’s liable. I think that is quite clear. The point is it is no different … I’m not really sure why it is any different between cars and washing machines and all sorts of other goods and services.”

GoAutoNews Premium queried whether the data security aspect of the push to wider sharing of technical data had been properly thought through, particularly in the context of remotely hacking car systems and the security implication of that with autonomous cars in particular.

“Yeah look, that’s a fair point,” Mr Simms said. “But again, my answer is, ‘why are cars different to a whole lot of other goods’? I mean the internet of things is going to have a lot of things internet enabled, and we facing that problem across the board.

“I don’t see why that argument means we treat motor vehicles differently to what we do with all sort of other goods. I just think that is a problem we have to deal with. Anyway, using the very blunt instrument of saying that only dealers can repair your vehicle seems to me to be not the right approach to deal with that problem.”

GoAutoNews Premium asked what changes the ACCC would have the car industry institute to alleviate the ACCC’s concerns.

“I think the answer to that is that if the new car industry adopted the undertaking we have from Holden, that would largely solve the problem,” Mr Sims said.

“As you are aware we instituted proceedings against Ford for misleading and unconscionable conduct, and these are allegations that we need to prove in the court. But with Holden they gave us an undertaking that really addressed our concerns. Obviously we need to make sure it is followed through, but if the industry was to adopt what’s in that undertaking that would address our concerns.

“(Holden’s undertaking) says we (Holden) will make consumers aware of their rights at the point of sale, we will make sure our dealers are dealing with consumers at any time with an eye to their rights and also says, for example, that if somebody’s got a car that just can’t move, for whatever reason, within 60 days of purchase then we will give you a refund or a replacement vehicle.”

GoAutoNews Premium asked Mr Sims for specifics on how the ACCC would like the car industry to provide data on fuel consumption and emissions, and what path he would have them take to arrive at those figures.

“My understanding is that the way they are moving in Europe is to change the laboratory testing so that it does more reflect the real world,” Mr Sims said. “So rather than have it in an environment that is so … contrived that you get false readings, let’s make sure that we are revving the car up and we are revving the car down and we are doing all the things as you would do in the real world, all that sort of stuff, do that in the lab.

“With emissions, there is talk of making sure you have a real world road test, but I suspect the first step is let’s try and make the lab testing a whole lot better than it is. That is the main thing we are advocating in relation to (emissions and consumption figures).

“It’s about making sure that you reflect real world condition as much as you can, and here we are suggesting that we will piggyback what’s going on in Europe.

“The more we can … piggyback on what’s going on overseas the better in these sorts of industries, particularly when we are not making cars in Australia. So if we can get all this done overseas that will work very well and that would satisfy us.”

Mr Sims has been widely reported saying that the release of this draft report was the start of the journey rather than the end, with the ACCC open to feedback and counter-criticisms from manufacturers.

“I would like the car industry to give our report a close read,” he said. “I’m sure they won’t agree with it all, but I would like them to understand that there are a range of problems here that they need to take seriously and address. We are happy to engage with them on that.

“We think (car-makers should) adopt what Holden said they will do with the undertaking they have provided and also a bit of law changed to make sure there is that access to the technical information so that not just the dealer can repair the car.

“Following the European testing procedures … we think we can deal with a fair bit of this problem and having invested in the report all we are really saying is ‘we are not letting this go, we are not just going to drop it and move on, we will stay with it until we see that change that needs to be made’.”

ACCC keeps industry in the dark

KEY car industry and lobby groups were not given copies of the ACCC’s draft report into its New Car Retailing Industry Market Study before its general release, even though several mainstream media outlets were given copies under embargo the day before.

Although some executives of industry bodies were called to a teleconference with the ACCC on Wednesday to discuss the report’s findings, they were not given prior opportunity to absorb the entire 145-page report and its accusations against the industry before it went public at midnight.

This meant organisations such as the Federal Chamber of Automotive Industries (FCAI) and Australian Automotive Dealer Association (AADA) woke up to headlines and news broadcasts of the accusations.

Specialist motoring media outlets were also not assisted with embargo copies.

The ACCC indicated it was cautious about advance distribution of its report because it said it contained forward-looking information with implications for publicly listed companies.

It did not say why embargoed copies could not be distributed after the close of the Australian Stock Exchange on Wednesday.

By Daniel Cotterill