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A RENAULT dealer has told the Senate Committee enquiry into the relationship between car retailers and the OEMs in Australia that he was sent a warning letter over his sales performance even though he was 30 per cent ahead of his targets.

He also told the hearing that he was being set sales targets for cars that Renault did not even have available for sale.

Richard Bennett, managing director of Magic Enterprises, which runs nine brands from four sites in Western Australia, including a Renault dealership in Melville in Perth, told the committee that he thought it was possible that he was being set up for dismissal as a Renault dealer.

Giving evidence to the committee under the protection of parliamentary privilege, Mr Bennett said Renault sent him a first letter of non-performance in mid-November which was tabled by Labor Senator Deborah O’Neill who said she wanted to “flesh out how a nonperformance letter is abused as a form of power”.

Asked what the letter meant, Mr Bennett said: “On its own merits, it could mean that we need you to do better. We want to work with you and we’re just putting it in writing so we can get some formulated plan to get a better result out of your area. That is what it could mean and that is sort of what it hides behind.

“In my opinion … this particular letter … and there were several other dealers in Australia that received it … can be used as building a file or building a book. So, if I wanted to change or they wanted to lessen the amount of dealers or change the way that they’re doing business, it may be easier to terminate a dealer for poor performance, whether that is true or false, than have to go through any other means of changing their dealer network.

“So it’s a bully letter. It’s the schoolyard bully that hides behind the playground and asks for your lunch money. It’s not how you do business.

“I received this letter without one phone call, any previous emails; it just came out of the blue. Three months earlier, I was runner-up as national dealer of the year. So I must have been going okay. And then I received the letter. I was achieving my targets. The month after this letter I achieved 130 odd per cent. I think it was 133 per cent of my target and I got 130 per cent of my target for that quarter.

“The issue is someone just said: ‘Let’s write some letters. And this is where the bully comes in. I spoke to one dealer who was on a second letter for nonperformance but the metrics were all wrong. It wasn’t a fair letter. And I believe that Renault was using this to build a file.

“At the time I believe that we’re up to something and I thought they may have been leaving Australia. And I thought they may have been just building a file to try and terminate some dealers so they wouldn’t have to do any payouts as in with the Holden case.

“But they were definitely up to something; hence why I had a solicitor write a reply, because when they get the big fancy lawyers and they want to take you on, there is no board or nowhere we can go and they produce a file that individually is harmless and when put together what has been collected over a period of time (that) can look (bad).”

Senator O’Neill: “What financial benefit and what business benefit do they get by constructing a file determined to make your business look bad? What is the advantage to them?”

Richard Bennett: “The word bully is a good one because it’s a continual threat. So to have dealers on notice like this, if a manufacturer then wants you to buy extra stock because they have too much old stock of their own, they can persuade a dealer to buy cars they (the dealers) simply just don’t need. Because a manufacturer makes their money when they sell them to us, not when we sell them to the public, as long as they’re off their books.

“So there’s various reasons to keep the dealer under pressure to redo signage, to redo your apprentices.  This is the old school, the old sort of bully style tactics.

“Some manufacturers would turn up to your office, have a conversation with you, and run through a fair commercial reason on why this should be done. In Renault’s case, in the past eight months, that certainly isn’t how they operate.”

“I received this letter without one phone call, any previous emails; it just came out of the blue. Three months earlier, I was runner-up as national dealer of the year. So I must have been going okay. And then I received the letter. I was achieving my targets. The month after this letter I achieved 130 odd per cent. I think it was 133 per cent of my target and I got 130 per cent of my target for that quarter.”

Senator O’Neill: “So … the benefit of sending a letter like this is to threaten the car dealer to a point where they will agree to any terms and conditions that the manufacturer comes up with, just so that they can keep their business alive.”

Richard Bennett: “That could be one reason why that letter was sent. And in my opinion, this particular letter was sent for that reason.”

Mr Bennett told the committee that he was not able to achieve his sales target for January this year because Renault had made no cars and there were no cars at Renault Australia or in dealer stock. He said that he was expecting to receive another letter this month saying that his January performance was not up to date; “but they have no cars”.

Senator O’Neill: “So they’re asking you to sell something that they cannot put in your car yard. And if you don’t sell the car that they don’t provide to you, which is absolutely an impossible task, they then have grounds to terminate you on a poor performance basis. Is that correct Mr. Bennett?”

Richard Bennett: “Absolutely correct. And there is no code to say that they can’t.”

Senator O’Neill:  “All of the manufacturers are overseas … so there’s no Australian knowledge of the market. And we have reached a point now, where overseas companies like Renault can set targets for you to sell cars that they can’t even provide to you and use that as a trigger to take out your business, which is invested in the millions of dollars and employs hundreds of people. And you’re requesting the government to give us a mandatory code so we can negotiate and survive. Is that really what you want, Mr. Bennett?”

Richard Bennett: “Correct. We just want a fair playing field for when the water turns rough. We just need an avenue and a fair playing field so that the dealers and our businesses are protected from potential overseas bullies that have no interest in what we’re doing.

“And as I said, a letter in this terminology sent by an upstanding manufacturer with the right intentions, can be a great sales tool, or a great business tool to work together to make sure your improvement in your performance is correct. It is when it is sent and used, possibly in a malicious way that is where it all falls down. And that is why a voluntary code doesn’t work.

“As I said, if it was a genuine letter, possibly the general sales manager would have rung me before it was sent. My local rep had been in with my dealer principal. No mention of poor performance. Quite the contrary, we had an email from Renault the week earlier congratulating us on some of our performances. It was very contradictory.”

Senator O’Neill: “So to be clear, do you think manufacturers will abide by the voluntary principle guidelines that the government offered as the solution to this problem at the end of last year?”

Richard Bennett: “Only when it suits them, not when it doesn’t.”

Senator O’Neill: “So if there is a point of conflict? The only answer is to have what sort of a code Mr. Bennett?”

Richard Bennett: “We need a mandatory code and one that is easy to navigate.

“I suppose you called it like a divorce. If it is a divorce there are heated personalities, there are hurt feelings. We need an avenue that we can discuss in an arbitration that is fair, and if a manufacturer is wanting to make changes for various reasons, a dealer is fairly compensated.

“Dealers put everything on the line to run their businesses to try and get a return for themselves and their people and the community around us. We are important businesses; we are the sponsor of the local footy club, we sponsor the local dance club, the sponsor of your local charity. We are all over our community. And we try very hard to do the right thing.

“We just need some protection from a manufacturer that has a malicious intent. And, as I said, the majority of them are fantastic businesses until they want to change. We just need some code that can protect us and the manufacturer can run a rule book by,” Mr Bennett said.

By John Mellor