THE Senate Committee investigation into the relationship between car dealers and OEMs has quizzed the head of Mercedes-Benz in Australia over vans sold to dealers that could not be sold to the public because they did not meet homologation rules.

Labor Senator Deborah O’Neill raised the issue with Horst von Sanden, CEO of Mercedes-Benz Cars and managing director of Mercedes-Benz Australia-Pacific by asking for details on the issue but Mr von Sanden said he was not in a position to help but was happy to take the questions on notice.

According to questions posed by Senator O’Neill, about two years ago Mercedes vans were imported into Australia but software issues meant they were not compliant with Australian market requirements.

Senator O’Neill, based on information received, wanted to know if it was correct that the dealers were expected to hold the stock on their books while the matter was sorted and that Mercedes-Benz refused to refund the dealers during that time which it was suggested was as much as two years.

Here is how the exchange played out:

Senator O’NEILL: “I want to go to a problem that I’ve become aware of: I understand it happened about two years ago and I believe it involved getting Mercedes-Benz vans certified here in Australia. Are you aware of this issue?”

Mr von Sanden: “To be honest, I’m not aware of this issue. Basically, we have prepared this (appearance before the committee) on the car side and, whilst I’m the CEO, my main responsibility is for the car business. But I’m happy to take that on notice and provide you with the information.”

Senator O’NEILL: “Okay, thank you for coming prepared for the nature of the questions. I’m just trying to establish what sort of relationship you actually have with your dealers. Of course, when we step out of the house we always try to put our best foot forward and I’m sure that you’re trying to put on the record what Mercedes-Benz is doing that’s right.

“But I understand that there has been a problem, and I’d be surprised if either you or Mr Nomikos* didn’t have general knowledge of this problem, seeing as I’m a senator, I’m not in the industry and I know about it. So, if you can give your answers in general terms and then take any detail on notice, I would appreciate that. Are you aware of this issue of Mercedes-Benz vans not being certified in Australia?”

Mr von Sanden: “Yes, there was an issue. I’m aware of that, yes.”

Senator O’NEILL: “According to reports, I understand that Mercedes-Benz sold dealers vans which were not certified to be driven in Australia. Is that correct?”

Mr von Sanden: “That I’m not 100 per cent sure of that. I would need to verify and report back to you.”

Senator O’NEILL: “Was it that there was a problem with the roadworthiness and compliance generally with these vans and that Mercedes-Benz delivered them and the dealers got stuck with them?”

Mr von Sanden: “It was a problem with the software, as far as I recall, which needed to be rectified. As a result of that, the homologation was somehow not going through. But, as I said, I’m happy to provide the details, because I don’t have them with me.”

Senator O’NEILL: “So there was a delay in them being fixed in whatever way was required for them to be certified as roadworthy in Australia. From when they were actually sold to the dealers, who had to hold them as stock, how long did it take, roughly, for them to be certified in Australia?”

Mr von Sanden: “Unfortunately, I don’t have those details, and I don’t want to guess here, so, if you’ll allow me to provide you with the details—”

Senator O’NEILL: “From my reading of the documentation in the public space, it was around two years. Does that sound approximately right?”

Mr von Sanden: “I’m sorry, I don’t know.”

Senator O’NEILL: “From a report, it’s now a matter of public record that it was a period of roughly two years, or even longer for some. This was a problem for your dealers. My understanding is that they asked Mercedes-Benz to take those vans back so they weren’t sitting with stock, ageing on their car lots.

“Certainly, if you couldn’t sell it, you would want to return it to the person who’d provided it to you, especially if you’re in a long-term relationship (with the dealers), as you’ve described. Did you offer to take those vans back when it was found that they were not able to be sold by the dealers?”

Mr von Sanden: “Let me briefly clarify. We obviously have a specific way of operating our businesses. Whilst I’m the CEO, our managing director for vans reports directly into the van division of our mother company in Germany, so the negotiations between the retailer network and our van division happened there. I was not involved, and that’s the reason why I can’t give you a clear and straight answer and I need to, basically, come back to you on that.”

Senator O’NEILL: “Australia doesn’t make any cars anymore. We rely on imports. The relationship that our customers have can’t be with Australian companies because there is no longer a car manufacturing industry, so we rely on relationships with overseas manufacturers, and all of our car dealerships rely on supply from overseas manufacturers who are very big multinational companies.

“That’s why it matters that Australian consumers are protected from other countries and other companies; companies that reside in other countries and might want to act in the Australian market in ways that are not in the Australian people’s interests.

“Could you take on notice:

• How many dealers actually asked for these Mercedes-Benz vans to be taken back so that they didn’t have to hold the stock that they’d purchased that was unsaleable?
• Did you offer to take any of those vans back?
• Could you give me some explanation, given what emerged about the lack of roadworthiness at the point of sale to the dealer network, what was the rationale for undertaking that action?
• Do you believe it was an ethical business practice?”

Mr von Sanden: “We’ll take that on notice.”

Meanwhile, in a response to an approach from GoAutoNews Premium Mercedes-Benz Vans said that it “offered support measures to dealers impacted by delays in homologation. These measures were endorsed by the (Van) Dealer Advisory Council and dealers were then able to sell the stock in question once the matter was resolved.”

*Jason Nomikos, director of customer management and network development, appeared with Mr von Sanden.

By Neil Dowling