The peak industry body for Australia’s automotive dealerships has called for the two major political parties to introduce stronger frameworks to protect its members.
The Australian Automotive Dealer Association (AADA) has released its pre-Federal Budget submission to the sitting Labor Government and the Coalition, requesting greater consultation with industry in the wake of three high-profile carmakers leaving their former dealers in the lurch.
In the past five years, new car dealers have faced the closure of Holden, as well as both Honda and Mercedes-Benz moving to an agency model, taking ownership of stock away from franchises.
Each of these cases has resulted in at least one court battle between former dealers and the carmaker, something which AADA CEO James Voortman believes needs to change.
“We have seen in recent years the willingness of some manufacturers to drag Australian dealers through the courts where they are regularly drowned out in legal costs by Fortune 500 companies,” Mr Voortman said.
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“Constant threats of non-renewal of franchising agreements for dealers not meeting unrealistic manufacturer demands undermines their appetite to invest and employ Australians.
“The AADA is calling on both major parties to ensure there is a level playing field so that Australian dealers have the confidence to invest in a nationally distributed dealer network which has served consumers buying and servicing their vehicles so well for so long.
“We know that the industry is going through a fundamental change and we are seeing a record number of new entrants emerging in the Australian market. It is essential that in their urgency to set up dealer networks, these brands must operate under a fair and reasonable framework that governs their relations with Australian dealers.”
In the AADA’s pre-budget submission, the peak body has called for “a range of measures to be introduced such as giving dealers protections against unfair trading practices and extending the ban of unfair contract terms, which will go some way to addressing the power imbalance between manufacturers and franchised new car dealers.”
“The AADA advocates that this in turn will encourage new entrants in the market whilst improving competition and productivity but not at the expense of existing Australian businesses.”
Its submission comes amid a period of growth in Australia’s new car market, at least from the perspective of the sheer number of brands on sale.
Currently there are approximately 60 brands operating in Australia, but at least half a dozen more are expected to launch this year, further dividing what is arguably the most competitive auto market globally.
For context, the US has about 40 new car brands, but almost 16 million vehicles are sold there annually. Here, our market has only exceeded 1.2 million sales in the past two years.
Despite this disparity between the Australian and US new car markets, Mr Voortman believes we should follow the protections available across the Pacific.
“Whenever I speak with dealers across the United States, they are shocked to find out how vulnerable Australian dealers are to changes in the market,” Mr Voortman said.
“With the emergence of new brands and technology, it is only appropriate that the Australian market now mirrors the protections found in the US.”
The US itself is going through a period of change, with president Donald Trump repealing a non-binding agreement for EVs to account for 50 per cent of US vehicle sales by 2030.
News agency Reuters previously reported word from insiders close to Mr Trump that the US federal tax credit for EVs, which can be worth up to US$7500 (A$11,625) to buyers, will be axed in the coming months.
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