An industry-specific legislated code of conduct for automotive dealerships is set to be enforced by the Australian Competition Consumer Commission (ACCC).
The code aims to enforce fairer contracts between the manufacturer and the dealer in the automotive industry, which normally are one year contracts that manufacturers can terminate them with little notice.
The code has earned support from various sectors, such as the Australian Small Business and Family Enterprise Ombudsman. “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,” said Ombudsman Kate Carnell.
Carnell lamented that manufacturers continue to use their market power to constrain car retailers, which in turn disadvantages customers, as well as manufacturers being able to terminate an agreement with little notice, despite dealers meeting or exceeding performance targets.
Another point of contention is that manufacturers would not buy back vehicles, stock, parts, tools or equipment when the dealer agreement ends. It was pointed out that the dealership has little say in the numbers as the manufacturers determine the stock.
Manufacturers and dealers also contend on warranty policies.
“(Such behaviour) is reminiscent of banking behaviour and should be prohibited. Dealers complained that they are not often not reimbursed for the cost of warranty work, affecting not only their relationship with the manufacturer but also with their customers as well.
“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,” Carnell stated.
