Australian Consumer Law Review
AADA is conducting a root and branch review into Australian Consumer Law as it pertains to franchised new car dealers and consumers
introduction
The Competition and Consumer Act (2010) (Cth) – Schedule 2 The Australian Consumer Law (ACL) is the Commonwealth’s national consumer protection legislation.
The ACL mandates uniform national legislation and regulations for consumer and supplier protections across each Australian state and territory. The ACL prescribes the rights of consumers and the obligations businesses have to consumers as either a supplier (dealer) and/or a manufacturer of goods and services.
The ACL is applied across the economy to cover goods purchased by consumers and businesses and is enforced by the Australian Competition and Consumer Commission (ACCC) or the various state-based consumer protection agencies. The ACL does not cover financial products, and has limited application when consumers purchase a vehicle under auction conditions.
From the inception of ACL as a national law from 1 January 2011, it is not unreasonable to say that there are very few industries which have felt the effects of the ACL to the same extent as the automotive retail industry. For the purposes of this scoping document, a supplier as identified under the ACL will be referred to as ‘the dealer’.
about the consumer and the ACL
Consumers purchasing motor vehicles rightfully hold the dealer and manufacturer(s) of those products and services to a very high standard because:
- Motor vehicles are a critical mode of transport and reliability is non-negotiable.
- Motor vehicles are often the most expensive or second most expensive purchase made by a consumer.
- Motor vehicle consumers have a post sales relationship with dealers which usually lasts several years.
- The consumer justifiably is of the view that a new motor vehicle should perform without fault and be blemish free for a reasonable period of time.
- Consumers quite often return to the dealer to have the vehicle serviced and maintained according to the manufacturer’s guidelines.
The definitions in the ACL are subjective and can lead to unfair outcomes for both consumer and dealer.
About the dealer and the acl
The franchised new car dealer is in an invidious position when seeking a remedy that must ensure they are not potentially breaching the consumer rights as they apply under the ACL. This is a residual effect of some vehicle manufacturers strategies to lessen their own expenses by making it a difficult process for the dealer to be fully or in some instances partially indemnified by the manufacturer (who built the vehicle).
how successive governments and the courts have enacted with the acl
The ACL has been in operation since 1 January 2011 and in that time there have been a number of reviews and inquiries which have found that consumers of automobiles have struggled to successfully enforce their ACL rights. The ACCC is on the record as stating that some dealers are reluctant to address the consumer issues as a result of the manufacturers being obstinate or taking an unlawful approach to the consumer and dealers rights. This has been evidenced by several prominent court cases and subsequent enforceable undertakings between the ACCC and OEMs.
dealers in australian courts and tribunals and the role of manufacturers indemnity
Dealers are reluctant to co-join manufacturers as a respondent to an action in the various state based civil and administrative tribunals or other state-based courts of arbitration. Those same tribunals and applicants can, at times, not be as informed of the entire suite of protections available to dealers in the indemnification provisions as legislated in S 259-277 of the ACL. On many occasions it would be in the consumer’s best interest (and an avenue to a true access to justice) if the consumer were to deal specifically with the vehicle manufacturer.
Presently the ACL does not permit for the dealer who sold the motor vehicle to specifically refer a consumer to a vehicle manufacturer where a manufacturing defect is diagnosed (major or otherwise) and the ACL provisions are being enforced. This type of consumer-manufacturer communication is permitted in international jurisdictions such as the United States where best practice consumer and supplier protections are in place.
the connection between consumer, dealer and manufacturer
There are features of the automotive industry which make the industry unique, such as the interaction between the consumer, the dealer and the manufacturer. All too often it is the dealer, who played no role in manufacturing the vehicle, who carries the lion’s share of risk in meeting the ACL obligations with flow on effects on the consumer.
Dealers (of some brands) remain unsure as to how many hours the manufacturer will reimburse them for diagnosing and rectifying a manufacturing defect that manifests itself in a consumer vehicle. The issue for many dealers is then further exacerbated with much evidence to show unlawful, or harsh, conditions placed upon the indemnification of the dealer with regard to a vehicle that has been either:
- Subjected to a dealer buyback with further restrictions placed upon the dealer by the manufacturer; and/or
- How and for what price the dealer can either resell the buyback vehicle or how it may be wholesaled or sent to auction.
Pursuit of reforms to the ACL with regards to motor vehicles must not only protect dealers but also strengthen consumer outcomes. The reality is that when dealers are fairly indemnified and no longer forced to negotiate each claim on uncertain unfair terms, they can focus on delivering timely repairs and maintaining customer trust in the product and brand.
terms of reference
- Supplier, manufacturer and consumers compliance with consumer guarantees obligations and the ability of consumers and suppliers of motor vehicles to successfully enforce their rights.
- The appropriateness of joint dealer/manufacturer liability in a relationship characterised by a power imbalance (Section 259-277 of the ACL).
- The adequacy or other of dealer indemnification and the consequences for consumers.
- The requirement of the ACL to clearly define the concept of the application of depreciation when honouring consumer guarantees where a vehicle buy back ensues.
- Adequacy of dispute resolution avenues.
- The consequences of automotive brands arriving in Australia and the requirement to ensure they are truly aware of their obligations under the ACL.
- Lessons from other international jurisdictions.
- The consequences of automotive brands departing the Australian market and the consequences for parts supply, warranty and recall obligations.
- The emergence of electrification and the consequences for consumer guarantees.
- The consequences for parts supply, warranty and recall obligations.
stage 1 - issues paper
The first step is the development of an Issues Paper which will evaluate the issues above and make key findings for the AADA to develop into a series of actions in the aim of reform which will ensure a fairer system for dealers and importantly by extension for their customers.
Emeritus Professor Jenny Buchan will be authoring stage 1 of the Review which will consist of interviewing stakeholders, reviewing the law as it stands and publishing key findings.
how to make a submission
The AADA is encouraging relevant parties to contribute to the Review by emailing their submission to the below email address by Friday 6 February 2026. Submissions can be made in a letter form but are encouraged to directly refer to the Terms of Reference where applicable.
Email address for submissions: aclreview@aada.asn.au
For any questions about the Review, please contact Michael McKenna at mmckenna@aada.asn.au