The chief executive of the Federal Chamber of Automotive Industries (FCAI) Tony Weber, who represents the OEMs in Canberra, said in a statement that he is keen to ensure there is a clear understanding of what these potential models, including agency, will mean to consumers “without whom there would be no industry’.

But the dealers, via the Australian Automotive Dealer Association (AADA), have fired back saying the agency  issue is not about customer service, but about what it says is an attempt to convert $650 million in dealership value over to the Mercedes-Benz factory without Benz paying for it.

The AADA says that by constantly referring to consumer change, the FCAI is simply trying to confuse the issue.

AADA CEO James Voortman said in a statement: “Consumers are not crying out for this change. In fact, recent data demonstrates Honda is the only top 20 brand in Australia to have experienced a decline in sales.

“There are valid concerns over this model, but this (the court action) is not about stopping the agency model. 

“Mercedes-Benz is perfectly entitled to change its business model over time, but in doing so it is not entitled to steal the hundreds of millions of dollars of value built up over generations of predominantly family-owned businesses.

Tony Weber, chief executive of the Federal Chamber of Automotive Industries (FCAI) and James Voortman, AADA CEO

Mr Weber said he was speaking up because “recent events have led to an increased reference to – and discussion about – how consumers buy vehicles in Australia”.

He said consumers had a choice in how they buy clothes, electronics and watch TV, and want the same choice when buying a new car.

“Innovation and competition are kings across the retail landscape. Despite this, some car dealers want to immune themselves from change, even when customers are crying out for new ways to do business,” he said. 

“Efficient, effective markets rely on innovation, transparency and flexibility – the new car market is no different.”

 Mr Weber said over-reaching regulation from big Government should not stand in the way of reform, improvement and growth that responds to consumers’ changing needs.

“The agency model is one example that enables innovation and evolution and provides choice and competition to today’s consumers, regardless of where they live, who do not want the same car buying methods and experience their parents and grandparents had.

“Even the Federal Government acknowledged the importance of the agency model as an option by including it in the franchising code, which was implemented in July 2021,” Mr Weber said.

“It introduces consistent pricing to Australia’s new car market and retains competition between car brands. Australia has 52 brands and more coming – that is the competition which drives down prices for consumers.

“This model will for the first time enable regional car buyers to buy any model through their local dealership and not have their choice limited by their location.”

The FCAI said: “Deloitte research shows that new car sales account for less than five per cent of dealer revenue.  The more profitable areas of after sales service, parts and accessories, used cars, and finance remain unchanged under the new sales models which are designed to improve the experience of customers.

Mr Weber said the FCAI believed that Australia had extensive competition and franchising regulations and further Government intrusion into the marketplace would stifle the industry’s capacity to innovate to meet the changing needs of the Australian consumer.

Dealers take Mercedes to court

Mercedes dealers sign under protest

Dealer fire back

The dealers responded by saying the legal action in the Federal Court of Australia, seeks to “prevent the auto colossus from forcing major changes which “will decimate the local industry”.

Mr Voortman said: “Far from delivering benefits to consumers, the switch proposed by Mercedes-Benz is driven by a desire to appropriate more than $650 million in the value of businesses built up by dealers without a cent of compensation.

“This is ‘fake news’ from the FCAI claiming that consumers will ultimately benefit from these

changes. The recent experience from Honda shows unequivocally that prices will go up and competition will go down. In the case of Honda, consumers have voted with their feet and it is the only major car brand experiencing a decrease in sales in the last quarter.

“Consumers are not crying out for this change.”

“Mercedes-Benz is perfectly entitled to change its business model over time, but in doing so it is not entitled to steal the hundreds of millions of dollars of value built up over generations of

predominantly family-owned businesses,” Mr Voortman said.

By John Mellor