Mr Blackhall said the loss of goodwill under the agency model “is hugely important for us” but in metaphorical terms is “a live electric wire that no regulator wants to touch”.
Mr Blackhall’s remarks are timely. The goodwill issue is becoming increasingly important amidst expert predictions that there will be another 10 auto brands arriving in Australia soon; all of which will be negotiating the goodwill elements of their dealer agreements.
David Blackhall
Some dealers are suggesting that the arrival of more brands gives them the opportunity to take a harder line and negotiate terms fairer to the dealers when it comes to goodwill.
Mr Blackhall told the dinner guests: “The legal arm wrestling over this new distribution concept (agency) put the spotlight on goodwill.
“As we have said repeatedly, we need strong specific automotive protections and that should include measures to prevent the destruction of business goodwill that is built up over many years of hard work by dealers.
“The recent federal court decisions have shown that dealers do have significant risks in that regard.
“But let’s be quite specific here. The bottom line is this. If you as a dealer have signed a dealer agreement, and seek to resile from that agreement on unconscionability grounds, you are going to find that very tough. Especially if you wind up in court.
“I would say from my point of view, the pro tip on this would be to negotiate hard, sign carefully, and never go to court. Because we’ve proven in two recent very important cases, the courts really cannot get this across the line because of the bar in the federal court.
“So look out for yourself. That’s what we’re saying. Be careful what you sign and what you agree to. So the battle for fairness in franchising will continue. We must have strong built-in protections. It’s just that simple.
Mr Blackhall said the franchising code continued to be amongst “things we really need to keep talking about”.
“When the government announced Dr Schaper to undertake a review of the franchising code, we all took a collective big breath. Why? Because in the past 20 years, we have had more than two dozen reviews of various kinds. So it’s a well-ploughed furrow.
“But we will always accept a challenge from the government. So we participated in the process. And we did see the government adopt some positive recommendations.
“Number one, the inclusion of our new truck dealer members under the elements of the automotive provisions of the code that didn’t exist before this review.
“Secondly, and really importantly, all dealers will benefit when service agreements are specifically covered under the code. Now, there’s work to do to make that happen yet, but it is on the agenda, and that will be a very big step forward.
“Number three, the government is also considering licensing franchisors. Now that would be significant. It could benefit our members in dispute resolution. And again, there’s work to do to get this across the line. But it’s on the agenda. So that’s all progress that is positive.
Referring to the New Vehicle Efficiency Scheme (NVES) he said the industry was on a journey towards net zero “whether you like it or not”.
He said the government’s central piece of its fight against automotive based climate change is the NVES standards, announced earlier this year by ministers Bowen and King.
“These rules and targets apply for January 2025, just five months from tonight,” he said.
“We get it. We’ve supported the government’s NVES, in principle. In principle. That said, we have big issues with the deliverability of the aggressive timetable that has been announced.
“In meetings with senior ministers together with like-minded industry bodies and with strong support from individual AADA directors and members we pushed to make some changes to the original policy that resulted in crucial reclassifications of product into more logical categories. This was particularly beneficial for the most popular LCVs sold in Australia.
“And again, there’s big work to be done here. But we did see some progress. The NVES is due for review in 2026. So we’ll be watching the dealer sales mix closely over the next 18 months.”
Referring to the transition to EVs, Mr Blackhall said: “Hybrids are an important bridging technology.
“The VFACTS numbers through June of this year showed that a proportion of new buyers are unconvinced about pure plug-in EVs. At least for now some of them are hedging their bets and buying more affordable, lower risk hybrid vehicles.
He said that it was a concern for the industry that the Greens “demonise hybrids”.
“I think the attitude towards hybrids has got to change. It’s driven by what I call climate phobia…this is an irrational fear of fossil fuels.
“I believe doctrinaire thinking in this manner is an enemy of progress and we’ve got to be brave enough to get that out there and just do what’s right for the country and what’s right for our industry.
Mr Blackhall said the AADA continues to call for structural reform of the automotive taxation environment in Australia.
“We have advocated strongly for a long time for the removal of the luxury tax which is a leading example of what I call The Walking Dead of Taxes which were designed to protect our local manufacturing base.
“The import tariff is another example of these ghost taxes that simply refuse to die. With the proliferation of free trade agreements, the tariff applies to just a handful of imports that hit the European importers quite hard.
“I say to Mr Chalmers (the treasurer) to please tear these taxes down. You have an unexpected record budget surplus. Please use some of it to deliver meaningful tax reform that will directly and immediately benefit car buyers. It will stimulate the economy and drive employment as the savings are passed on.
Mr Blackhall called for a more generous instant asset allowance and argued that the FBT exemption for EVs should continue to apply to plug-in hybrid vehicles beyond the plan cut off.
Referring to long-standing policy challenges in skills and training, he said the AADA in the past year supported several government reviews of the shortage of skilled technicians.
“We reminded policy makers of the over 60,000 jobs that our members support as well as the countless thousands of community and sporting clubs and local businesses that are supported by these same dealers in these urban and rural regional markets.
“These translate into hundreds of thousands of votes. We really need politicians to be focused on what we do in our rural and urban communities and I would say to the Minister for skills and training: ‘Work with us, and let us help get this thing sorted’.
Mr Blackhall said that cyber security education was essential for dealers and that some Australia dealers have already suffered losses as a result of cybercrime.
He warned that dealers “must ensure” that we get protected from predatory behaviour from their OEMs.
“It exists. People think of car dealers as big, powerful, wealthy organisations.
“They are not all like that. It’s a mixed bag of large companies, small companies, single operators, multi-franchise operations, and so on. We need some protection because we face huge mega corporations, multinational corporations.
“We want the government to reinforce the progress we’ve already made in these many code reviews over the last five years. In other words, enforce the rules that are already there. There are examples where enforcement has been so weak, the penalties have been a slap on the wrist for some of these companies.”
By John Mellor
