A MAJOR industry review aims to fight a power imbalance between dealers and car-makers where it is often the dealer carrying any liability under the Australian consumer law.

The Australian Automotive Dealer Association (AADA), which represents over 3000 franchised new-car dealers, has launched a review into the Australian Consumer Law (ACL) in the automotive industry to ensure that both consumers and Australian retailers are better protected under the law.Launched this week, the AADA’s review is calling for submissions from all industry stakeholders – including car-makers, consumer groups, and other industry associations – on how the ACL is currently performing for both car buyers and automotive dealers.

The AADA said that the timing for the review is appropriate given the arrival on the Australian market of many new brands and manufacturers. 

As a first step, the AADA has engaged an independent expert, Emeritus Professor Jenny Buchan, to develop an issues paper to be published in the first quarter of 2026.

Emeritus Professor Buchan

Emeritus Professor Buchan is an expert in addressing power imbalances in relationships between small and large business, and she will be consulting with industry, government and consumer groups before publishing the issues paper early in 2026.

AADA CEO James Voortman told GoAutoNews Premium that its announcement of a review comes alongside the federal government’s plan to strengthen the indemnification provisions.

“But we think we need to go further, which is why we have decided to, as an industry, look at it and get feedback and have experts – including Emeritus Professor Jenny Buchan – to look at it and invite people to contribute,” he said.

“Hopefully, we will get a body of work that we can take to the government to help convince them of the need for reform.”

Mr Voortman said that although the review is being led by the AADA, he said the result should not be “solely to the benefit of the dealer.”

“There will be manufacturers who think the ACL provisions should be changed to make the law clear,” he said.

James Voortman

“There are manufacturers who already do the right thing by their dealers in terms of indemnification. 

“So, you know, I think there will be some manufacturers who look at this review we’re going to do and participate in good faith.

“I also think that a manufacturer who has been operating in this country for decades will be looking at all of these new brands coming to the market, and would be saying that we all have to play by the same rules.”

Mr Voortman said most new players – many being Chinese car-makers – were “fiercely focused” on getting as many new products into the market as possible. 

“And that’s good. Some of these Chinese products in particular are very impressive, but I think it’s always been important that fast growth in the market is matched by fast growth in after sales support, in warranty support and so forth,” he said.

“There have been instances where a brand grew too quickly and then wasn’t able to service all its customers, leading to conflicts.

“It is important to keep customers happy, but it’s just also important that the law is as clear as possible, that the law protects dealers to the extent that they are not out of pocket, and that customers know what they’re getting when it comes to remedies they’re seeking under the ACL.”

Mr Voortman said: “Quite rightly consumers purchasing motor vehicles rightfully hold the dealer and manufacturer(s) of those products and services to a very high standard.”

“However all too often it is the dealer – who played no role in manufacturing the vehicle – who carries the lion’s share of risk in meeting the ACL obligations, with flow-on effects on the consumer.”

To ensure that the issues paper clearly identifies issues surrounding the effectiveness of the ACL in meeting automotive consumers’ expectations, Prof. Buchan will conduct the review by interviewing key stakeholders, reviewing relevant ACL provisions and publishing key findings on how the automotive industry is unique in its obligations to consumers. 

The review will also look to best practices overseas where the vehicle manufacturers are in no doubt as to what the indemnification processes are.

“Identifying and addressing power imbalances has been a key feature of my professional experience,” said Emeritus Prof. Jenny Buchan.

“To be able to bring my experience and author this issue’s paper, when the biggest transition to low-emission vehicles is happening right now in Australia, is something that I can see is very pertinent.”

This review is timely considering the recent government announcement to strengthen supplier indemnification laws, making now an opportune time to ensure that there is clarity in applying the law on behalf of consumers and if not, there is time to amend laws before new civil penalties are in place. 

The federal government this month announced it would prohibit unfair trading, including subscription contracts, consumer guarantees and supplier indemnification frameworks.

It said the announcement, which will lead to draft legislation in early 2026, would mean that “when products or services fail, Australians get the refunds, repairs or replacements they’re entitled to”.

Hon Dr Andrew Leigh MP

“Businesses that don’t comply will face tough civil penalties and regulators will have expanded powers to enforce the laws,” said the announcement by the Hon Dr Andrew Leigh MP, assistant minister for productivity, competition, charities and treasury. 

“Manufacturers will be required to indemnify suppliers for the cost of providing remedies, so small businesses aren’t left out of pocket for doing the right thing,” it said.