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A FORMER Holden dealer has reacted sharply to comments by the Federal Chamber of Automotive Industries (FCAI) that the government’s call to investigate further measures to reign the power of OEMs over dealers was “against the interests of consumers”.

Mark Palmer, dealer principal of Gaukroger Sales in Inverell NSW, one of the 200 retailer sacked when Holden pulled out of Australia and one of a group of dealers taking legal action against Holden for breaching its dealer agreement, took exception to the FCAI’s approach.

The comments by the FCAI came in the wake of a discussion paper released by the federal government this week designed to seek views on whether the automotive franchise code, which went into effect on July 1 this year, should be strengthened even further.

Predictably the FCAI opposed the idea and, in a move designed to paint dealers as the adversaries of car buying families in the eyes of politicians, FCAI CEO Tony Weber said in a statement that “by failing to consider the consumer, the discussion paper appears to put the interests of one component of the supply chain over Australian families”.

“The ink is not yet dry on far reaching industry regulations introduced last month. Their impact needs to be seen before more regulations are contemplated,” he said.

“The Government describes its franchising reforms as having already delivered ‘big wins’ to dealers, but where there’s a winner there’s also a loser – and in this case it’s the Australian consumer.”

In a letter to Mr Weber, which has been shown to GoAutoNews Premium, Mr Palmer said: “As one of the few remaining Holden dealers that are in litigation with General Motors, I feel I am in a much better position than you to comment on the effect of the discussion paper on the consumer.

“How could you possibly state that it was in the consumers’ best interest for General Motors to announce the retirement of the Holden brand midway through five-year dealer agreements?

“How was that in the best interests of either the dealers or the consumers with such short notice?

“Could you please explain how if that is allowed to happen to any Australian automotive franchise group in the future, it benefits the consumer.

“How is Honda, going from a full dealer network to a “not negotiable” pricing model where the consumer deals direct with Honda (without free market competition), in the best interest of the consumer?

“Mr Weber, I put it to you that vehicle importers in Australia have had the upper hand with franchise agreements that provide very little if any protection for either the franchised dealers and the consumer, should the importers wish to act unconscionably as was the case with General Motors.

“This discussion paper won’t make the Australian automotive market less competitive for the consumer. It will make importers more accountable to Australian law should they wish to do business here.

“I put it to you that’s why they (the OEMs) don’t want it and that’s precisely why you are employed to take the stand you are now taking to attempt to stop it.

“Neither the Australian government nor the Australian consumer will be fooled by your crocodile tears,” Mr Palmer said.

The discussion paper seeks views on three key areas that were not included in the current code but have been the subject of intense pressure from representations on behalf of dealers to be included in the rules governing the way auto retailers are treated by OEMs.

The discussion paper seeks views from across the industry on:

  • The merits of a standalone automotive franchising code of conduct
  • The options that might achieve mandatory binding arbitration for automotive franchisees
  • Evidence to support the view that protections under the code be extended to other dealerships in the auto sector including farm machinery, motorcycles, trucks etc.
  • Minister for Employment, Workforce, Skills, Small and Family Business, Stuart Robert, released the discussion paper saying that the Morrison Government was “continuing to bring significant reform to the franchise sector” and that is was seeking “further reform to protect Australia’s family-owned automotive businesses and their employees from the growing power imbalance with multi-national car companies”.

See also: Feds look at more dealer reforms

By John Mellor