Archives: Dealer Bulletins

Please be aware that the franchising review survey closes this Friday 20 October 2023.

As part of the Franchising Review being undertaken, Independent Reviewer Dr Michael Schaper has invited current and former franchisees to share their views about franchising.

The AADA strongly encourages members to participate in the survey as it will form part of the evidence base which will be required to make the necessary changes to the franchising laws.

We urge all Dealer Principals in all groups to respond to this short survey.

Responses to the short survey serve a very important function in informing the Franchising Review team about matters that are critical to our industry.

The survey is conducted anonymously and should only take a few minutes to complete.

For more information or to complete the survey, please see the link below.

https://consult.treasury.gov.au/franchising-review

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Following a State Government review of the Motor Dealers and Repairers Act 2013 (MDRA) and consultations with industry beginning in 2022, on 11 October 2023 the NSW Parliament passed new laws amending the MDRA.

It is important to note that the 2023 Amendment Bill does not include the contentious online sales guarantee amendments proposed in the 2022 Draft Bill.

Section 68 of the MDRA provides a Dealer Guarantee for defective vehicles in NSW, and the Australian Consumer Law provides overarching nationally harmonised consumer protections. The Dealer guarantee provisions of the MDRA in section 68 remain unchanged and unamended.

Dealers should note that no action is required at this stage. The laws have passed however the regulations are yet to be finalised and commencement dates have not been decided.

The NSW Department of Customer Service have advised they will be taking a staged approach to commencing the Bill. Some aspects will commence soon, prior to the end of 2023, however the more complex reforms will require further development and consultation. AADA will continue consulting with The Department to ensure sufficient notice is provided to Dealers before implementation and will update Dealers accordingly.

The Motor Dealers and Repairers Amendment Bill 2023 updates the MDRA 2013, and includes changes to the following:

• Online trading is recognised and regulated for Licensed Dealers
• Dealer websites to include MD license numbers displayed prominently
• Dealer advertising must carry the MD license number
• Online purchasers must be given an opportunity to inspect vehicles
• Maximum deposits for online purchases
• Penalties for offences under the Act are increased
• Odometer tampering penalties increase to a maximum of $156,500
• It is now an offence to possess or fit odometer tampering devices
• Prohibition of cash purchases of vehicles by recyclers
• Expanded list of prohibited persons
• New provisions for disqualified persons
• Cooling off for vehicles purchased online and Dealer financed
• Streamlined recordkeeping will allow digital records and remove duplication
• Administrative changes to trade show applications

The MDRA Regulations will also be updated to reflect the 2023 amendments.

AADA will provide further information to Dealers when commencement dates are announced, and the regulations are available.

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As part of the Franchising Review being undertaken, Independent Reviewer Dr Michael Schaper has invited current and former franchisees to share their views about franchising.

The AADA strongly encourages members to participate in the survey as it will form part of the evidence base which will be required to make the necessary changes to the franchising laws.

We urge all Dealer Principals in all groups to respond to this short survey.

The survey asks important questions on issues such as:

• relationship with your franchisor;
• effectiveness of the Franchising Code;
• Disclosure Documents;
• Dispute resolution; and
• Regulation of the franchise sector.

The survey is open until 20 October 2023. Responses to the short survey will inform the review of the Franchising Code.

The survey is conducted anonymously and should only take a few minutes to complete.

For more information or to complete the survey, please see the link below.

SURVEY LINK

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Historically, membership of the AADA has occurred through the approval of Dealer Councils and line group representative bodies that come together under the AMDC banner. Recently several new brands have arrived in Australia, some of which are experiencing rapid sales growth thanks to strong Dealer support, but they are doing so without the guidance of Dealer Councils or advisory groups, which to date, have not been formed for these networks. While many Dealers are AADA members by virtue of them being multi-franchised, they are not members for the non-participating brands they sell, and this is something the AADA Board have instructed us to address.

It is our strong belief that every franchise network should have a Dealer Council or similar body to represent their interests directly to their franchisor. For those who do not have a council, the AADA secretariat has a standing offer to assist in the establishment and operation of one and we would encourage all Dealers representing these brands to take up the offer.

In the absence of a council however, we would like to enlist Dealers of brands selling more than 1,000 units annually to join the AADA and commence financial contributions, based on a fee per car sold.

To achieve this, we will commence sending to Dealers who sell one of these brands, a request for a report of units sold over the previous three-month period. From this number, we will generate and send an invoice for the AADA membership fee, the same as that of participating brands.

Like our current membership fee arrangements, this subscription model is based on the goodwill and honesty of our members. We are hopeful that Dealers see the value in AADA membership and recognise that AADA is deserving of their full support, including for those volume brands whose Dealers receive the benefit of the AADA advocacy work but who are not currently contributing financially.

In January of 2024 the AADA secretariat will commence the membership process described above. The first invoice will be issued in March 2024 for the preceding three-month period and thereafter continue at quarterly intervals.

We trust this arrangement will be acceptable to all however, if you have any questions or need further information, please contact:

Brian Savage
DEPUTY CHIEF EXECUTIVE OFFICER

Australian Automotive Dealer Association Ltd.
E: bsavage@aada.asn.au

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This is to advise you of the upcoming annual general meeting of the members of the Australian Automotive Dealer Association Limited. The details of this meeting are as follows:

• Date: Tuesday 31 October 2023
• Time: 2:00pm (AEDT)
• Place: Video conference (details provided upon registration)

At the meeting, members will be asked to consider and vote to:

• accept the annual report
• accept the director’s report
• accept the auditor’s report
• accept the revised AADA Constitution
• accept the annual financial statements
• accept the outcome of the election of directors

NOTICE OF AGM & PROXY VOTING FORM

Notice of 2023 AADA Board Elections & Nominations

The new AADA was established in 2014 by its Founding Members.

The AADA Constitution provides that 2023 is the eighth year that Members are invited to vote for their representative.

In 2023, the representative position that is up for election in your state is:

• New South Wales: Edwina Gilbert – standing
• South Australia: David Reynolds – standing
• Tasmania: Sam Nixon – standing

Suitably qualified and experienced motor vehicle Dealers are invited to stand and contest the election to represent their State in the forthcoming elections. The closing date for nominations is COB 11 October 2023.

Interested parties should confirm their desire to stand for election in writing to the AADA Returning Officer, Brian Savage at PO BOX 4409 Kingston ACT 2604 or by email bsavage@aada.asn.au.

If no other candidate contests the election in the States listed then the proposed candidates (above) or any single nominee will be duly elected and serve a 2 year term.

All candidates must comply with the AADA Code of Practice regarding Elections, which will be provided upon a candidate standing.

AADA Directors serve in an entirely voluntary capacity and donate their time and experience to give back to the industry. More details of the role and likely time required to fulfil the role can be provided by the AADA.

NOTICE OF 2023 AADA BOARD ELECTIONS & NOMINATIONS

The NSW State Budget was handed down this morning with major changes to the Government’s policy in relation to electric vehicles. Issues of relevance to Dealers are summarised below.

Removal Of Stamp Duty Exemption and Rebate for Certain Vehicles

• From 1 January 2024, stamp duty exemptions and the $3,000 rebate for the purchase of EVs will cease. The liability for the Road User Charge (RUC) will also change so that all zero and low-emissions vehicles (including plug-in hybrids) registered for the first time or transferred from 1 January 2024, will be liable to pay the RUC from the earlier of 1 July 2027 or when EVs amount to 30 per cent of new vehicle sales. Taking account of delivery delays, transitional arrangements will preserve the stamp duty exemptions and rebates for people who contract to purchase an EV before 1 January 2024.
• While the NSW EV RUC is not expected to commence until 1 July 2027, the revenue at risk if the High Court decision in Victoria goes against the Government is expected to be $180 million in 2027-28 and $1.7 billion annually in the long term.
• The Government is implementing this change to redirect spending to programs that more effectively encourage uptake of EVs. Savings of $260 million will be used to implement the revised EV Strategy.

Electric Vehicles Charging Infrastructure

The NSW Government aims to increase electric vehicle sales to more than 50 per cent of new cars sold in New South Wales by 2030. To achieve this, the Government is investing:

• $263 million in new (recurrent) funding to deliver the Electric Vehicle Strategy, including additional EV infrastructure,
• $149 million to co-fund the delivery of ultra-fast EV charging stations,
• $20 million for co-funding EV charging infrastructure in commuter carparks,
• $20 million to co-fund destination charging along tourist routes,
• $10 million to co-fund about 500 kerbside charge points in areas of metropolitan NSW where residents do not have access to off-street parking, and
• $10 million to co-fund upgrades to electrical infrastructure in about 100 medium and large apartment buildings.

The NSW Government is also investing $105 million to support private and local council fleets to purchase EVs and is committed to electrifying its own passenger vehicle fleet.

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Yesterday afternoon the Honourable Justice Jonathan Beach handed down his judgement on the Federal Court Case – Mercedes-Benz Australia Pacific vs. Mercedes-Benz Dealer Litigants Group.

Disappointingly, Justice Beach found against the applicants (the Dealers) and dismissed their claims.

The judge made brief comments and has released the attached public summary judgment. A more detailed judgment (600+) pages will be released once the Judge rules as to which part of the detailed judgment ought to be redacted for confidentiality.

Among his comments at the hearing were:

• The applicants (Dealers) put forward a powerful and thorough case.
• The applicants were successful on many issues of fact but lost on the law.
• The applicant’s strongest case, although unsuccessful, concerns statutory unconscionable conduct.
• Justice Beach made mention that there may need to be modifications to the franchising code.

This case is obviously of great interest to all of Australia’s franchised new car Dealers and the AADA will review the judgement in greater detail and provide a comprehensive update to members on the results of the case and wider implications for the industry.

The Government is currently undertaking a comprehensive review of the Franchising Code which presents a significant opportunity for the AADA to use the learnings from this case in our engagements and response. The AADA will highlight the need for stronger mandatory protections and advocate for changes to the Code to ensure it can sufficiently protect Australian Dealers.

This is clearly a very disappointing outcome and AADA will work hard to understand this judgement and fight for a better system for franchised new car Dealers.

PUBLIC SUMMARY JUDGEMENT

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The ATO has issued a determination on Luxury Car Tax (LCT) and the eligibility of goods carrying vehicles including utes.

A car, for LCT purposes, is a motor-powered road vehicle designed to carry a load of less than 2 tonnes and fewer than 9 passengers. It does not include motorcycles or similar vehicles.

LCT applies to new cars sold over the threshold of $76,950 or $ 89,332 for fuel efficient vehicles. Commercial vehicles designed for the principal purpose of carrying goods used for business or trade are not subject to LCT. Motor homes or campervans are not subject to LCT.

The ATO determination LCTD 2023/1 Luxury car tax: how to determine the principal purpose of a vehicle, published on 23 August 2023 can be viewed on the ATO website.

To clarify the decision-making process on commercial vehicles the ATO have a simplified formula and provided examples as guidance.

The simplified method using a calculation including seating capacity and goods carrying capacity is particularly relevant to dual-cab utes and modified vehicles. The load carrying capacity and number of seats to carry passengers are most relevant to the calculation. Modifications may also be considered where they alter the passenger capacity or increase the goods carrying capacity.

There may be implications for some utility vehicles which have 5 seats and a relatively low goods carrying limit (payload).

It is suggested that Dealers become familiar with the ATO LCT 23/1 determination and seek advice from a tax accountant familiar with the automotive industry so that the correct interpretation of LCT is applied to vehicles sold over the LCT threshold and where the commercial vehicle status for the purpose of exemption needs to be determined.

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Consultation on the Franchising Code Review is now open, with the Government releasing a consultation paper seeking feedback to inform the Independent Review of the Franchising Code of Conduct.

The AADA welcomes the release of the consultation paper as an opportunity to examine the effectiveness of the Franchising Code of Conduct in fostering a fair and transparent business environment for new car and truck Dealers.

The consultation paper seeks feedback on:

• The general fitness for purpose of the Franchising Code.
• The role of the Australian Competition and Consumer Commission and the Australian Small Business and Family Enterprise Ombudsman in supporting enforcement and dispute resolution under the franchising regulatory framework.
• The role of the Franchising Code in regulating the automotive sector.
• The impact of 2022 reforms which increased certain penalties available under the Franchising Code.
• Provisions in the Franchising Code related to the Franchise Disclosure Register.

The AADA’s response will highlight key areas of concern for the industry. These include the expansion of franchising protections to truck Dealers and other automotive franchised Dealers, improving access to justice, expansion of Unfair Contract Terms protections, general issues with the move to an agency model in the automotive industry and ensuring appropriate tenure of agreements.

The AADA will continue to engage with members throughout the review to inform the AADA’s response to the consultation paper and encourages members to also provide their own responses. Please reach out to the AADA Team for any assistance required in preparation or submission of responses.

The consultation period closes on 29 September 2023 and the consultation paper is available to view online here.

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In late 2023, significant changes to Australia’s unfair contract terms (UCT) regime will take effect.

From 10 November 2023 the use, application of or reliance on unfair terms in a wide range of standard form contracts will become illegal, with contraventions attracting new higher maximum penalties, as opposed to previously where it could only be declared void.

These changes are not retrospective and will only apply to new agreements or renewals commencing on or beyond 10 November 2023. However, where a term of a contract is varied or added on or after 10 November 2023, the changes relevant to deciding whether a contract is a standard form contract apply to the whole contract.

Standard form contracts are typically used in industries where there is a high volume of ‘agreements’ occurring and contracts are generally offered on a ‘take it or leave it’ basis. This may include contracts with suppliers, service providers and consumers. Dealers should consider their own compliance with these changes prior to the commencement date.

Standard contract terms may be regarded as unfair if one party to the contract has a significant advantage over the other and it would cause financial or other harm to the other party if enforced.

The reforms also expand the UCT regime to apply to a wider class of small businesses. The significantly expanded definition of ‘small business’, will apply to businesses that employ 100 people or less (increased from 20) or any business with an annual turnover of less than $10 million.

The AADA has continued to advocate on behalf of members on the issue of UCT and welcomes the recent changes which will help strengthen protections for small businesses from unfair terms in standard-form contracts. However, AADA will continue to advocate for all franchise agreements to qualify for UCT protections, irrespective of the number of employees or annual turnover.

There are a number of resources explaining the changes available, and members are urged to familiarise themselves with these changes prior to their introduction.

Dealers and Dealer Councils should seek legal advice prior to finalising new agreements and be advised that these UCT changes continue to apply to consumer sales contracts and to ensure that these contracts are updated to ensure compliance, particularly, as higher penalties apply.

More information on the upcoming changes can also be found on the ACCC website.

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