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THE senate inquiry into Holden’s operations in Australia has this week been extended with the Education and Employment References Committee formally extending its investigations between car manufacturers and car dealerships.

The senate has also allowed the committee a further extension in time, now required to report on December 10 this year, up from November 12. Submissions will be accepted by October 30 to allow time for comment.

Investigations will be extensively expanded to explore the regulation of the relationship between car-makers and dealers.

In its statement this week, the senate said these investigations will include:

  1. practices employed by manufacturers in their commercial relations with dealers, with specific focus on:
    • investment required and tenure provided
    • termination and compensation practices
    • performance requirements
    • behaviour around warranty claims and Australian Consumer Law
    • unfair terms in contracts
    • goodwill and data ownership;
  1. existing legislative, regulatory and self-regulatory arrangements;
  2. current and proposed government policy;
  3. dispute resolution systems and penalties for breaches of the Franchising Code of Conduct;
  4. current and proposed business models in selling vehicles;
  5. legislative, regulatory and self-regulatory arrangements found in international markets; and
  6. the imposition of restraints of trade on car dealers from car manufacturers.

GoAutoNews Premium reported last month that the senate inquiry was planned to expand into the broader Australian car retailing industry.

Holden inquiry senators – Labor’s Deborah O’Neill, Louise Pratt and Don Farrell – said in a statement last month that the conduct of OEMs had a “devastating effect” on Australian car dealerships.

“Overseas companies such as General Motors don’t have Australian businesses at heart when making decisions from their overseas head office,” the senators’ statement said.

“More car manufacturers are changing their business models along the same lines as GM.”

The Australian Automotive Dealers Association (AADA) said the matter was of extreme importance and would bring equality and fairness to the industry.

Its CEO James Voortman said: “We hope it will pave the way for reforms to protect Australian dealers in the same way the US and EU protect their dealers against the power of large car companies.

“There is plainly a massive power imbalance between Australian dealers and the multinational car manufacturers to which they are franchised.

“Dealers take on the majority of the risk and are compelled to invest very large sums of capital in facilities, personnel, stock and equipment, but are offered very little in the way of protection if a manufacturer decides to terminate a dealer, leave the country or completely change its distribution model,” Mr Voortman said.

The AADA said of concern is a code of conduct that fails to protect businesses such as dealerships and opens the sector up to retail concepts that may further disadvantage dealerships and affect their ability to maintain business and employment.

By Neil Dowling

Dealer Solutions