David Blackhall

DESPITE some damning findings in the Australian Competition and Consumer Commission (ACCC) market study into car retailing and strong government lobbying from the Australian Automotive Dealer Association (AADA) regarding power imbalances between car-makers and dealers, AADA CEO David Blackhall has insisted the dealer body was “not at war with the OEMs”.

In his address to the AADA convention on the Gold Coast this week, Mr Blackhall also emphasised that problems identified by the ACCC study were not represented across the entire new-car market.

“Not all manufacturers are equal in this matter,” he said. “Our experience is that good network management walks hand in hand with market leadership. You can look at VFACTS, so I don’t think I need to spell it out.

“But if the market leaders get it and behave in ways that absolutely work for us, what’s wrong with the other guys? They need to come out of the anaesthetic.”

Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber stopped short of admitting to GoAutoNews Premium that there were problems in the relationship between dealers and car-makers, but expressed concerns about going down the route of over-regulation. (See separate story).

“I am sure that the system, if we analysed it we could find ways to make the system better … (but) if there is a problem, over-regulation is not the solution,” he said.

“This is the real danger; we could quite quickly get to a point of over-regulation.”

Both Mr Blackhall and Mr Weber agreed that working together to iron out the issues raised was the preferred way forward, and that this was already underway.

“I think there was a lot of venting in the last few days, but I think balanced heads working together from both sides is most likely to bring a profitable outcome for the entire industry and consumers,” Mr Weber said.

“We’ve already opened the dialogue with the AADA, we’re having these discussions and my view is where industries self-regulate it is a better outcome especially to those groups. I say to the AADA – and they know this – let’s work through it because that is the way in which we are going to get the best outcome.”

Mr Blackhall told delegates at the AADA convention the two industry bodies were already in communication over the matter.

“We need to work with the OEMs, we’ve got to work with Tony Weber at the FCAI, the people that run that part of the business,” he said.

“We have to be joined together and the big part is, we met with them, with Tony and his team, some of the leading manufacturers that sit on the FCAI board and I believe we can walk down this path together to get a good outcome for everybody. That is where we are heading.”

However, Mr Blackhall did not hold back in his criticism of the way some dealer networks were being handled by car-makers.

“There is a degree of moral corruption in the way some networks are run,” he said.

“It’s morally corrupt, is it not, for an entire network to invest in expensive facilities and at the same time develop a plan concurrently with that requirement, that includes serving non-renewal notices on the same dealers that are investing. I suggest that if you do it, in Australia, there should be consequences. And I think there will be consequences.”

Mr Blackhall also called for more transparency and cooperation between car-makers and dealers.

“Share what you are doing. Do market studies with us. If you’re planning network reductions, say so. Don’t sit there and say spend $10m on this facility and by the way, we’ll give you a non-renewal notice. Not good, not right, not moral. Can’t be allowed to happen.

“If it’s not business as usual and there is a network readjustment going on, say so. We are your partners, aren’t we? That’s the word we use all the time, so we think it would be fair to have transparency.”

Mr Weber countered that there were “plenty of examples” where success for a car-maker was reflected in success of its dealers.

He agreed that the ideal outcome would be for the industry to resolve the issues raised and move on without resorting to the industry-specific code announced by shadow assistant treasurer Andrew Leigh during the AADA convention.

“I don’t know a politician who argues that we should have more regulation rather than less,” he said.

Mr Blackhall urged manufacturers and importers to renovate their dealer networks to align with their market share, product strategy and marketing strategy.

“You have to work on your network profile,” he said. “We’re not trying to debate that, we’re not interested in controlling that in any way, but you’ve got to do it in the interest of your brand and your dealer partners.”

By Haitham Razagui