David Blackhall

AUSTRALIA’S dealers are entering 2019 with their best ever chance of emerging with a specific automotive code of conduct that will regulate the manner in which some OEMs can control their retailers’ businesses.

The move is expected to pave the way to strip the relationship of unfair pressure tactics that have over the years threatened the viability of hundreds of dealerships and the jobs of thousands.

In a year that saw the political pendulum swing the dealer’s way, 2018 produced bipartisan support from both sides of politics for the dealers’ position that lumping them in with regulations for all other smaller-scale franchises like Jim’s Mowing to Bakers’ Delight failed to take into account the size and complexity of dealership operations and the pressure that can be brought to bear upon them by OEMs.

In a rush of activity just before Christmas, the ALP included a specific Automotive Code of Conduct as part of its policy if it wins government, and the Coalition government earmarked funding to pay for the development of the code within the Industry Department.

On top of that, the Australian Competition and Consumer Commission (ACCC) announced a proposal to develop a class exemption that would allow all franchisees to collectively bargain with their franchisor regardless of their size or other characteristics.

This would allow franchised new car dealers to collectively bargain with their franchisor without having to seek prior authorisation from the ACCC.

The CEO of the Australian Automotive Dealer Association (AADA) David Blackhall described the developments as “a great start”.

“There is a lot of hard work to go into the detail of the regulations that will underpin any code, but it is a great start and we applaud the government and we applaud the opposition,” he said.

Mr Blackhall said that from his experience the indicators were very positive.

“The first thing is that it is now truly bipartisan,” he said. “The Labor Party have said that it is their policy to introduce a mandatory automotive code to stabilise the relationship between franchise new car dealers and the offshore OEMs.

“So that is the Labor Party. We have been working with the government for some time on a commitment. They have effectively made that commitment in the 2018-19 Mid-Year Economic and Fiscal Outlook (MYEFO) by committing resources for the development of an Automotive Industry Code of Conduct as part of its support for small business.

“There is a four-line statement appendix that alludes to $1.4 million in funding that has been set aside by the treasurer to facilitate, among other things, the development of such a code.”

Mr Blackhall said there was a lot of work to be done on “sorting out how it would be administered, and what the content of the code would actually say”.

“That is the work that the Industry Department is going to have to do this year,” he said.

Mr Blackhall said the funding announcement was followed the next day by a joint statement by the minister for small and family business, skills and vocational education Michaelia Cash and minister for industry, technology and science Karen Andrews.

“They put out a joint statement to say they have now asked the department of industry to create what is called a regulation impact statement which has been done and it is out and on their website,” he said.

“It calls for submissions from interested parties by February 16 which is a pretty short fuse in these matters.

“So that gives us encouragement to believe the government is seriously intent on this.

“But the really more important point for us is that it kicks off a process that lights a fuse inside the department that cannot be extinguished.

“So it is a request for submissions from interested parties to comment on the draft regulation and that must work through to its conclusion.

“One of the really neat things about this process is that it is agnostic as to the government.

“The process has kicked off, the bureaucracy swings into action and no matter who occupies the government benches this year they will report back to the relevant minister.

“So it is an unstoppable train in that sense. And that is more positive.

“We have bipartisanship, wide support by the industry stakeholders including the franchise council of Australia, all of the industry bodies that play in this space including MTAA, AAAA, and AAA.

“We take great stock in the fact that we now have bipartisan political support, broad support across the industry, and we think we now have a chance to get this code up and on its feet in 2019. We have got some momentum. Nothing is ever final until the scorecard is in the clubhouse but it is a very good start.”

Mr Blackhall said that “the only people who are silent on the announcements is the Federal Chamber of Automotive Industries (FCAI)”.

“But I want to make a strong point that we are sitting down with the FCAI early this month to work out how the OEMs can work with us inside this process,” he said.

“We see some dealer agreements with clauses in them that just raise your eyebrows and you wonder how clauses like that ever saw the light of day.

“But we are making a really sincere effort to work with the FCAI as the representative of the OEMs and we need them in the tent not outside the tent if we can possibly achieve it.

“We have engaged with them. They are willing to meet. We have a day set and we are just putting together what the agenda will look like.”

By John Mellor