Data Sharing Principles

AADA Position

Data collected by Dealers, manufacturers, and generated via connected cars should be shared securely and equitably in the interests of providing the best outcomes for customers, manufacturers, and Dealers. AADA has prepared a set of Data Sharing Principles to assist Dealers and manufacturers to reach agreement on data sharing.

Background

Developments in connected car technology and involvement of big tech companies in supply of connected car services has wrought many changes to cars and the customer relationship. There is the possibility of a fast evolution, or an industry revolution, to come.

Some automotive industry commentators say that the connected car could be an existential threat to the way Dealers traditionally operate.

AADA has prepared two documents to inform Dealers and assist Dealer Councils in preparation for data sharing discussions with vehicle manufacturers.

AADA has prepared a discussion paper – Motor Dealers, Connected Cars & Big Data and the AADA Data Sharing Principles.

Access to data and the development of software defined vehicles constantly transmitting vehicle data is a recognised industry issue. Some of the more concerning issues include:

  • If connected car data streams introduced by OEMs to enhance the automotive user experience, and expand services, are accessible only to OEMs then how will Dealers remain fully involved with the sales, servicing, and repair of vehicles?
  • It would appear to be a practical necessity for Dealers to have access to connected car data and OEM systems for the purpose of customer contact, vehicle servicing, and meeting expectations of customer satisfaction.
  • Our major concern is to ensure that Dealers are included, and not excluded from all data sharing, now, or in the future.
  • Will Dealers be excluded from access to information which includes data gathered by the Dealer in databases used to ensure the best outcome for customers, Dealers and manufacturers?

Priority has been applied to data issues by international Dealer associations. At the National Automobile Dealers Association (NADA) Convention held in January 2023, American, Canadian and European Dealer Associations presented on, recognised the importance of data to Dealers, and the challenges of integrating data sharing into Dealer operations.

The AADA Data Sharing Principles are based on the NADA Data Sharing Principles developed by NADA in the USA to assist US based Dealers.

The AADA intends that the principles can be used to initiate discussions between Dealer Councils and manufacturers towards reaching agreement on how data and data sharing will be applied equitably, and securely, between Dealers and manufacturers. AADA is recommending that Dealer Councils add data sharing as an item to meeting agendas and discuss data sharing issues so that these matters may also be addressed when meeting with manufacturer representatives.

Point-of-Sale Exemption

AADA Position

The AADA believes that the current system provides consumers with convenient and affordable car finance. We understand and support the intent of the Financial Services Royal Commission recommendations but believe that extensive consultation is required to get the best outcome for both consumers and new car Dealers.

The current system subjects Dealers to significant oversight from finance companies and, by and large, delinquencies in the car finance market are low. Should a stringent licensing scheme be implemented, it will result in duplication of process and increased compliance costs, which will be passed onto consumers. Smaller, regional Dealers will be particularly hard hit.

The AADA supports efforts to bolster responsible lending practices, but believes that this can be done in a manner that does not duplicate process or drive up costs for consumers.

Background

The final report from the Financial Services Royal Commission included a recommendation (Recommendation 1.7) that called for the abolition of the existing Point-of-Sale (POS) exemption for retailers (including new car Dealers) that act as “vendor introducers” to finance companies. In the case of new car Dealers this is for the provision of car loans for their customers. It is worth noting that the Royal Commission Reports included only one case study dealing with a car loan where a Dealer acted as introducer.

By abolishing POS, Dealers would be required to obtain a credit license or become an authorised credit representative. Both options would require duplication of process and increased compliance costs.

A survey of AADA members showed that very few have their own credit license or are appointed as credit representatives for their finance providers. This means that the vast majority of new car Dealerships throughout the country would be affected.

A rapid and unconsidered abolition of the POS exemption would likely be an existential threat for many small, mainly regional, new car Dealers that currently depend on the exemption. This is because of the relative importance of the ‘finance and insurance’ profit centre to their ongoing viability.

Automotive Franchising Protections

AADA Position

The AADA supports any action which addresses the effects of the imbalance of power that exists between powerful offshore motor vehicle manufacturers and new car Dealers.

Background

There is a power imbalance in the automotive industry 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 unfair and potentially unlawful treatment.

The franchising code of conduct only offers limited protection to new car Dealers. For a variety of reasons, car Dealers are pressured into entering agreements which contain oppressive contractual clauses and unfavourable termination, non-renewal and/or end-of-term arrangements.

Franchised new car Dealers are very different from the typical franchisees in terms of the scale of their investments and the nature of their business. Similarly, car Manufacturers are also very different from the typical franchisors in terms of scale, as they are very powerful offshore multinational corporations.

In recent years, the Government has introduced various automotive-specific protections into the Franchising Code. While this is a very welcome development, the new protections do not apply to truck, motorcycle or farm machinery Dealers – a situation which desperately needs to be remedied. Furthermore, the AADA remains concerned that Dealers do not have the same level of protection compared to their counterparts in the US and Europe.

The AADA will continue to pursue changes which guarantee security of tenure and fit for purpose dispute resolution mechanisms. Other areas of work include extending unfair contract term provisions, the ability to collectively bargain and improved processes for indemnification.

Access to Service and Repair Information

AADA Position

The AADA believes legislation compelling Manufacturers to provide service and repair information to independent repairers should ensure a level playing field for all repairers.

Background

Legislation compelling Manufacturers to share service and repair information with independent repairers took effect on 1 July 2022.

The AADA is part of the Australian Automotive Service and Repair Authority (AASRA), the industry group appointed as Scheme Adviser to manage the motor vehicle information sharing scheme. The role of AASRA is to ensure that the scheme remains viable, effective and meets with the legislative requirements that have been set in place. Among those requirements are that the scheme limit the provision of sensitive security and safety information to authorised repairers and that all information is only shared on commercially fair and reasonable terms.

Australian Consumer Law (ACL)

AADA Position

The AADA supports the ongoing process of reform of the ACL. Nevertheless, the AADA stresses that reform proposals must be balanced given the high-value and complexity of a modern motor vehicle.

Background

The Australian Consumer Law (ACL) (contained in Schedule 2 of the Competition and Consumer Act 2011) came into operation on 1 January 2011 and provides a single generic consumer protection law including a system of consumer protections and remedies in relation to defective goods and services known as ‘consumer guarantees’. These include:

  • a national unfair contract terms law covering standard form consumer and small business contracts;
  • a national law guaranteeing consumer rights when buying goods and services;
  • a national product safety law and enforcement system;
  • a national law for unsolicited consumer agreements covering door-to-door sales and telephone sales;
  • simple national rules for lay-by agreements; and
  • penalties, enforcement powers and consumer redress options.

Car manufacturers and Dealers are under a legal obligation to comply with the requirements of the ACL’s consumer guarantees. Unlike nearly all car manufacturers, Dealers are customer facing and as suppliers of goods and services, must uphold their obligations under the ACL regardless of a manufacturer’s warranty policy.

Manufacturers for their part are required to indemnify Dealers who are required to honour consumer guarantees, however often Dealers are denied indemnification due to prohibitively complex and burdensome claims procedures and prescriptive compliance and audit processes.

It is critical that in the process of manufacturers managing a Dealer’s response to an ACL issue, the obligation to indemnify Dealers for performing repairs under the ACL is honoured.

Skills and Training

AADA Position

A shortage of skilled personnel is a constraint on businesses operating in the automotive industry. Declining apprentice numbers and the lack of skilled immigrants entering Australia due to COVID-19 related boarder closures have exacerbated the issue which has been growing worse over recent years.

The Government should continue its investment in the Skilling Australians Fund to address the current skills shortage and renew the focus on apprenticeships as an attractive career pathway in the automotive industry. The Government should also consider temporarily uncapping the skilled stream of the Migration Program planning levels and removing or reducing the Skilling Australia Fund levy.

Background

A shortage of skilled labour in the automotive sector is a constraint on businesses operating in this sector. A report conducted by the Motor Traders Association of Australia (MTAA) in 2020/21 estimated a total shortage of 31,143 skilled personnel. The deficit is estimated to grow to 38,700 positions by 2022/23. There is a shortage of vehicle technicians, a critical cohort of workers responsible for servicing, repairing, and maintaining the fleet of 20 million vehicles on our roads. The impact of skills shortages includes loss of productivity, increased labour costs to retain skilled technicians, and use of sub-standard labour requiring greater supervision particularly in regional areas. There is also a huge consumer detriment to consumers who find they are unable to get their cars serviced and repaired and a massive economic impact on businesses who depend on roadworthy vehicles to provide and obtain goods and services.

The AADA fully supports the training of Australian apprentices and commends the significant investment the Government has provided for apprentices over the past two years. However, it is evident that demand for skilled labour in automotive repair services is outstripping supply which is a threat to our transport needs and we need to utilise skilled migration to provide the industry with the skills it desperately needs. We need to take measures which put Australia in a good position to attract the automotive talent we will need to maintain a safe vehicle fleet and simultaneously transition the workforce to a future in which low and zero emissions vehicles will make up a growing proportion of the fleet

In the 2017-18 Budget the Government announced a commitment to address skills shortages through the creation of the Skilling Australia Fund, with a focus on apprenticeships, trainees and pre-apprenticeships, and higher apprenticeships.

More information about the Skilling Australia Fund can be found on Department of Education website.

Automotive Taxation

AADA Position

New car buyers in Australia pay too much tax as they are subject to legacy taxes such as the Luxury Car Tax (LCT), Customs Duty and punitive state stamp duties.

Background

The Automotive Taxation System spans from the federal LCT to state-based stamp duties. In Queensland and Victoria this includes higher, punitive rates for vehicles above a luxury-level threshold. Additionally, import duties apply to cars from countries with which Australia does not have a Free Trade Agreement (FTA). Excise is applied to the fuel cars use, and administrative charges are levied to cover licensing and registration.

The LCT was introduced in 2000 to ensure that luxury cars did not become relatively cheaper when the Wholesale Tax was discontinued with the arrival of the GST. This tax raises some $600 million per year and falls on vehicles which have advanced safety and environmental features. It mainly effects vehicles such as the Toyota Landcruiser which could hardly be described as a luxury car. A range of inquiries and taxation reviews have recommended its abolition.

Concerningly, a number of state governments have started to levy luxury stamp duties. Victoria and Queensland have both implemented such taxes in recent years, meaning motorists in those states are subject to some of the highest rates of vehicle taxation.

The passenger vehicle tariff is a 5 per cent duty on vehicles entering Australia from non- Free Trade Agreement (FTA) countries. While Australia has concluded FTAs with major source countries such as Thailand, Japan, Korea and the USA, hundreds of thousands of vehicles from the European Union, South Africa and elsewhere still incur the tariff, which sees consumers pay some $300 million per year.

Vehicle Emissions

AADA Position

The AADA supports action on vehicle CO2 emissions and noxious emissions standards but urges the Government to proceed in a way that does not constrain vehicle choice, push up car prices or disadvantage sectors of the community.

Background

The AADA supports a light vehicle fuel efficiency standard but urges the Federal Government to work with the industry to implement a system which is fit for purpose for Australia. Australia is a small right hand drive market located at the end of a long and complex supply chain. Given these circumstances, it is important that policy is nationally consistent and does not go too far, too fast which would cause an increase in the costs of new vehicles as this would slow the uptake and have the effect of motorists holding onto older higher emitting and less safe cars for longer.

The Federal Government should prepare Australia for the emergence of zero and low emissions vehicles by encouraging the development of charging infrastructure, helping industry prepare its workforce for these new technologies and addressing questions such as the impact of low emissions vehicles on the electricity grid.

The Government should also play a leadership role in promoting the uptake of these vehicles by taking measures to reduce the prices of zero and low emissions vehicles, by removing inefficient taxes such as import tariffs and the luxury car tax.

It should also provide leadership to state governments who are all currently adopting different low emissions policies which is seeing a patchwork approach being adopted across Australia.