Dealerships, News, Regulations

AUSTRALIAN car dealers are telling the major parties that they are facing such an uncertain environment in which to operate under the present brand tsunami and the potential for closure of myriad brands weakened by the unsustainable flooding of cars from Asia, that the sector is losing confidence in its ability to fund the automotive transition. 

The dealers are telling the major parties that they need rules to protect them from their franchise OEMs which are all foreign car makers, some of which have demonstrated in the past contentious actions for dealers – especially those left behind from closure or network restructuring.

Dealers believe there is also plenty of evidence to show car-makers have opportunity to treat dealers questionably in their day-to-day interaction because there is an uneven balance of power in the relationship that favours the OEMs.

James Voortman

James Voortman

The dealers have been active in bringing to the attention of key members of the major parties the kind of ways these OEM-dealer conflicts play out.  

The latest move in putting its case to Canberra, the Australian Automotive Dealer Association (AADA), the peak body for franchised new car and truck dealers, has just released its pre-budget submission in which it pointedly calls on the federal government to implement a range of measures because Australian dealers “are losing confidence to invest in the automotive transition.”

AADA CEO, James Voortman said that over the past several years the AADA has recorded an increased number of disputes and threats of non-renewal of franchise agreements between offshore car manufacturers and local car dealers since General Motors terminated the Holden brand in Australia.

“We have seen in recent years the willingness of some manufacturers to drag Australian dealers through the courts where they are regularly drowned out in legal costs by fortune 500 companies. 

“Constant threats of non-renewal of franchising agreements for dealers not meeting unrealistic manufacturer demands undermines their appetite to invest and employ Australians,” he said.

“The AADA is calling on both major parties to ensure there is a level playing field so that Australian dealers have the confidence to invest in a nationally distributed dealer network which has served consumers buying and servicing their vehicles so well for so long.”

“We know that the industry is going through a fundamental change and we are seeing a record number of new entrants emerging in the Australian market. 

“It is essential that in their urgency to set up dealer networks, these brands must operate under a fair and reasonable framework that governs their relations with Australian dealers. That is why the AADA is calling on both major parties to commit to protecting Australian businesses,” – James Voortman CEO AADA

The suite of measures the AADA is calling for comes off the back of Australian Mercedes-Benz dealers heading back to court in March to appeal the Federal Court decision which ruled in favour of the Stuttgart-based company, which changed its distribution to an agency sales model in 2021.

Mr Voortman, who this week returned from the United States, said that “whenever I speak with dealers across the United States, they are shocked to find out how vulnerable Australian dealers are to changes in the market”. 

“With the emergence of new brands and technology, it is only appropriate that the Australian market now mirrors the protections found in the US.”

Mr Voortman reported the key topic of discussion in the US right now is how the automotive industry will respond to the Trump Administration’s withdrawal of incentives for the uptake of EVs.

In the pre-budget submission, AADA is calling on a range of measures to be introduced.These include giving dealers protections against unfair trading practices and extending the ban of unfair contract terms.

“These will go some way to addressing the power imbalance between manufacturers and franchised new car dealers. 

“The AADA advocates that this in turn will encourage new entrants in the market whilst improving competition and productivity but not at the expense of existing Australian businesses,” Mr Voortman concluded.

By John Mellor

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