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05 September 2018

Automotive industry needs enforceable code of conduct

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, announced today support for an industry-specific legislated code of conduct for automotive dealerships that will be enforced by the Australian Competition Consumer Commission (ACCC).

“The power imbalance between vehicle manufacturers and car dealerships is a major issue that is consistently raised with us, in both our dispute support area and our policy work,” Ms Carnell said.

“Manufacturers continue to use their market power to constrain car retailers, which in turn disadvantages customers.

“We consider the contract between the manufacturer and dealer as unfair. One year agreements are just not sustainable for the dealers trying to run a profitable small business when you take into account the substantial amount of capital required upfront.

“Manufacturers being able to terminate an agreement with little notice, despite dealers meeting or exceeding performance targets, is reminiscent of banking behaviour and should be prohibited.

“It is unacceptable that manufacturers will not buy back vehicles, stock, parts, tools or equipment when the dealer agreement ends. The dealership has little say in the numbers as the manufacturers determine the stock.

“Some features in warranty policies are also on our radar. Not only is the consumer out of pocket, but the dealership is often not reimbursed for the cost of warranty work, its reputation is damaged as is its relationship with the manufacturer.

“We want to see a level playing field for the small businesses and family enterprises that operate car dealerships, and would welcome involvement in bedding down an enforceable code of conduct.”