THE explosion of new brands entering Australia, and ongoing concerns about the power OEMs retain over dealers, has sparked a leading senator to alert the Labor caucus to potential problems flowing from the potential for widespread dealership closures.

Senator Deborah O’Neill this week said she is concerned that the flood of new OEMs entering the market may cause friction with dealer relationships and impact on the uptake of EVs.

Senator O’Neill, from the senate chamber and in senate committees, was at the forefront of a nationwide campaign to highlight what was seen as the unfair treatment of Holden dealers by General Motors when GM pulled the brand from Australia. She then went to bat for Honda and Mercedes-Benz dealers over what were seen by dealers as unfair arrangements in the transition to agency sales models.

Senator O’Neill told GoAutoNews Premium that she wants better education for the government when faced with the potential for OEMs to quit the market and leave dealers and consumers without proper financial or physical support.

Senator Deborah O’Neill

“I am concerned to make sure we have the regulatory environment that can support viable and thriving Australian businesses which are important in their local communities, not just for the jobs and training they provide but also the support they provide for social goods in those communities through sponsorships of things from sports teams to domestic violence shelters and school fetes,” Senator O’Neill said.

“We want to make sure consumers get the best choices, but also that operators in the market are viable and committed to providing the levels of sales and after-market support that consumers expect and deserve. 

“The traditional model of automotive retail has supported Australian small and medium businesses that do this.”

Senator O’Neill said the new brands coming into Australia, mostly Chinese, may do so at the expense of existing brands. The flood of new products and the fact the Chinese brands are significantly cheaper may also accelerate the loss of long-standing brands.

GoAutoNews Premium has recently been told that one Chinese brand has already sacked a franchisee after the dealer approached a rival Chinese brand with a view to establish that brand in a separate showroom. 

Senator Deborah O’Neill

It is this behaviour that Senator O’Neill wants brought to the attention of the government and to consumer law authorities.

She said it was a clear case of OEMs ignoring the laws introduced by the Australian Consumer and Competitions Commission (ACCC) under Australian consumer law.

Further, she said new brands could establish in Australia and find, after a short period, that conditions are not suitable for a profitable enterprise. This could be affected by factors outside the OEM’s control including weakening economic conditions.

OEMs had to be aware that exiting the market still required dealers and consumers to be supported, in the case of owners, with up to 10 years supply of parts, she said.

“I am speaking to a number of my Labor caucus colleagues in Canberra where we will meet dealer representatives and hear directly from them about the reality of the situation,” she said.

“Briefings like this are an important way for us as parliamentarians to understand the conditions businesses are facing, and to best consider ways that we can respond.”

Senator O’Neill said dealers “were significant employers in their local communities, give choice to Australian consumers and provide access via their networks across this wide brown land access to service and support – which is in the interests of their customers at an individual level, but also our country’s national security.

“Through my work on my committee’s 2019 inquiry into Franchising, I understand the operation of the law in this space and am concerned by the findings in recent court cases involving OEMs and retailers,” she said.

“I am concerned that OEMs continue to have disproportionate power in their relationships with dealers, despite efforts by successive governments to improve dealers’ capacity to negotiate through the implementation of the Automotive Franchising Code.

“As parliamentarians, we need to be ready to create the environment that best supports Australian businesses,” she said.

James Voortman

The Australian Automotive Dealer Association (AADA) told GoAutoNews Premium that it fully supports the senator’s move.

AADA CEO James Voortman said: “Senator Deborah O’Neill’s concerns on the arrival of so many brands on the Australian market are well-informed and we know that she is fighting hard for dealers to be protected during this time of unprecedented change in the automotive sector.”

He said she has been “a consistent advocate for new car dealers in Canberra and she has always recognised the significant economic benefits dealers bring to communities across Australia.”

“Senator O’Neill played a key role in highlighting deficiencies in the Franchising Code following disputes between dealers and brands like Holden, Mercedes and Honda,” Mr Voortman said.

“She has her finger on the pulse of this industry and is in regular contact with dealers across Australia.

“It is very reassuring that we have advocates such as Senator O’Neill in Canberra. I would encourage all dealers to form strong relationships with their elected officials so we have more voices supporting stronger protections for dealers.”