Car Dealers

Car Dealers

When you walk into a car dealership in Hawkesbury
or the Blue Mountains, you are generally walking into a small business that has been in the
area for quite a long time. Someone’s parents might have bought their car from it; their
son or daughter might be buying their car from it. Everyone who works there is part
of the community that they live in, because these are small businesses who are employing
locals. Aside from a house and any building related purchases, this car that you bought
is probably the single biggest purchase that you will make in your local community. As I rise to support the motion of the member
for Oxley, I am struck by the challenges that these small businesses face. As the Australian
Automotive Dealer Association, which represents these businesses, says: There is a Power Imbalance in the Automotive
Industry. [There is a] structural power imbalance between car Manufacturers (franchisors) and
franchised new car Dealers (franchisees) [that] disadvantages both dealership businesses and
consumers who purchase new vehicles from Dealers. Many Dealers enjoy good relations with their
respective Manufacturers and work in a mutually beneficial partnership, but there remain many
instances where Dealers are subjected to treatment resembling a master/servant relationship. Any small business knows that it’s not healthy
to have a dynamic like that for their business. It doesn’t just impact on you and your business.
As a small business owner for 25 years, I absolutely understand the power imbalances
that small businesses face in all sorts of ways. This one is peculiar to the major car
manufacturers. At the core of the issue is the terms of dealer
agreements: the basic contract between the manufacturer and the authorised dealer that
establishes the obligation for each side of the transaction in relation to sales, parts
or service facilities. Every one of those things is set by the manufacturer. They are
the big guy in this relationship. It means that dealers can face pressure about the terms
of the dealer agreement. The dealer risks huge costs if the manufacturer decides not
to renew the agreement. This is a business with a high cost of entry. It is not something
you just suddenly decide overnight to do. They have huge investment in their sites. The manufacturers set the rules of engagement
and exert a high degree of control over how dealers resolve consumer complaints. It can
often be the case that the manufacturer’s policies don’t include claim handling processes
that specifically address or even comply with responsibilities under Australian consumer
law. This is something that impacts not just the business but also their customers. The
manufacturers can impose complex and onerous warranty claim processes. Prior approval from
the manufacturers may be required before repairs can be undertaken, which leads to delays for
consumers. Those are issues we could actually help deal with so that these businesses have
an easier way of doing business. I notice that those opposite or all for getting rid
of red tape and regulation. Here is a place where we can actually help make a difference. What is our proposal? A Shorten Labor government
would implement an industry-specific auto dealership code. This goes to the issue of
the Franchising Code of Conduct, which works in this area. We have the view that this has
been absolutely unsuccessful in protecting franchised new car dealers or dealing with
the industry-specific issues that this sector faces. An auto dealership code will deliver
clear ground rules for manufacturers and dealerships, including obligations under the Australian
Consumer Law on consumer complaints; warranty and repair processes; dealership agreements,
including the ability to make variations to them; and termination notices. An independent
code will create a set of rules that both the manufacturers and the dealers must be
mindful of when establishing expectations around dealer conduct. Ultimately the consumer
will benefit once dealerships are able to conduct negotiations with manufacturers in
the context of a clear set of overarching rules. That’s really all small business ever
asks for: clear rules and some sort of level playing field, an even playing field, even
with the big guys. When we are talking about cars, this code
really will be drafted parallel to Labor’s your car, your choice policy, which is all
about allowing independent car mechanics access to the technical data they need to deliver
the best service to their consumers. All in all we are very focused on allowing small
businesses to get on with what they do best, and that is running a business with as few
constraints as possible.

About the Author: Michael Flood


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