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David Blackhall

AUSTRALIA’S peak automotive retail body has brought the corporate watchdog and the federal treasurer into the fight against cyber cars and repeated calls for an industry code of conduct.

The move by the Australian Automotive Dealer Association (AADA) follows similar concerns by the Victorian Automobile Chamber of Commerce (VACC) that last month launched its own attack on the practice of claiming unsold new vehicles as registrations.

It has also been joined by retail groups such as the Automotive Holdings Group Ltd that said in its annual report that cyber cars created “an imbalance of power between manufacturers and dealerships”.

The VACC said the practice of selling the vehicles – called cyber cars because of their status of having a fictitious buyer – was instigated by car-makers and was causing intense pressure on dealers.

The AADA today agreed with the VACC, writing to the Australian Competition and Consumer Commission (ACCC) and the federal and shadow treasurers.

AADA CEO David Blackhall said he was concerned about the pressure vehicle manufacturers are putting on dealers to report cars as sold when in fact there is no actual buyer.

“Pressure to pre-report vehicles as sold, in order to meet manufacturer sales targets, can have serious consequences as dealers are left with a backlog of unsold stock which is difficult to clear in a profitable manner,” he said.

“I have written to the ACCC chairman, Rod Sims, and to the assistant treasurer, Stuart Robert, as well as the shadow assistant treasurer, Dr Andrew Leigh, to outline the industry’s concerns.

“Refusing to pre-report these vehicles is simply not an option for many dealers as they fear the manufacturer will withhold important incentive payments or – even worse – cancel their franchise agreement.”

Mr Blackhall said pre-reporting can also adversely affect consumers as the warranty can start from the date of the reported sale rather than the actual sale.

“This can leave the car buyer with a reduced warranty period,” he said.

“Excessive pre-reporting is only one of a number of behaviours which occur due the power imbalance that exists between dealers and offshore vehicle manufacturers.”

The AADA has been calling for an Automotive Industry Code of Conduct to better regulate the relationship between franchised new-car dealers and vehicle manufacturers.

In its annual report delivered to shareholders last week, Australia’s biggest vehicle retailer Automotive Holdings Group Ltd said it continued to work with the AADA on the cyber-car issue.

“There has been a noticeable decline in vehicle margins across the industry in recent years which, to a large extent, has been driven by some manufacturers (importers) pushing the supply of new cars and, at the same time, raising bonus targets to unrealistic levels,” the directors said in the board review.

“The company continues to work with the AADA to deliver a satisfactory outcome in this matter.

“There is a strong push by the industry for the federal government to introduce a specific franchising code to address what is an obvious imbalance of power between some manufacturers and dealerships.

“At the time of writing this annual report the AADA has made significant progress in gaining support across the political spectrum.”

By Neil Dowling