Category: Industry News

AADA members would by now be aware of an announcement on 12 March 2021, by the Prime Minister Scott Morrison and former Family and Small Business Minister Michaelia Cash about strengthening of the Franchising Code of Conduct (FCC) and other measures to better protect new car Dealers.

The first tranche of changes takes the voluntary principles introduced late last year and embeds them in the FCC as mandatory obligations.

The FCC will be changed to reflect the following principles:

Principle 1

Franchisors should include provisions in new dealership agreements that provide for fair and reasonable compensation for franchisees in the event of early termination resulting from: withdrawal from the Australian market; rationalisation of their networks; or changes to their distribution models.

Principle 2

Franchisors should not include provisions that exclude compensation in new dealership agreements.

Principle 3

The ‘fair and reasonable compensation’ as referred to in Principle 1 above should include appropriate allowances for the loss a franchisee may incur, which can include:

1. Lost profit from direct and indirect revenue
2. Unrecovered expenditure and unamortised capital expenditure where requested by the franchisor
3. Loss of opportunity in selling established goodwill
4. Wind up costs

Principle 4

When an agreement is entered into it should provide franchisees a fair and reasonable time to secure a return on investments that have been required by franchisors as part of the agreement.

Principle 5

Agreements should include reasonable provisions for franchisors to compensate or buy back new vehicle inventory, parts and special tools, in the event of: non-renewal; withdrawal from the Australian market; rationalisation of their networks; or changes to their distribution models.

Principle 6

Agreements should include provision for timely commercial settlement and dispute resolution.

The AADA is working with the Department of Industry to finalise the detail of these changes and ensure that the intent is captured in the new regulations. The Government has also committed to making sure that the new reforms will explicitly capture new agency arrangements and that in future breaches of the Code are liable to incur fines of up to $10 million.

Further work will also be undertaken by the Government, in consultation with the industry, to establish a dispute resolution process that includes mandatory binding arbitration while also investigating the option of creating a stand-alone Automotive Franchising Code.

The recent release of the Competition and Consumer (Industry Codes – Franchising) Amendment (New Vehicle Dealership Agreements) Regulations 2020 introduces for the first time industry specific legislation for the automotive industry within the Franchising Code of Conduct. Many of the provisions introduced are designed to address the power imbalances that exist in commercial arrangements between Dealers and distributors.

Vinesh George, Principal of V.S. George Lawyers, has provided a Briefing Note on the New Automotive Franchise Regulations. This briefing note includes an explanation of the changes and analysis and evaluation of the new provisions.

Download Briefing Note

Introducing Dealer Talks: A new Podcast Series by Gumtree Cars in partnership with GoAutoMedia. Join ‘DealerTalks’ weekly as they unearth ‘The Road to Recovery’ following the unprecedented effects of the COVID-19 pandemic, and tackle the big issues facing our industry with special guest speakers and industry experts.

In Episode 1, host John Mellor of GoAutoMedia is joined by Richard Dicello, Head of Motors at Gumtree Australia, Shaun Cornelius, CEO of CarsGuide Autotrader Media Solutions, and Michael Holmes, Executive Director (Dealers) of Carsales, to discuss consumer car buying attitudes during COVID-19.

Episode 2 highlights used cars as a golden opportunity for Dealers, where John is joined by David Brown, Senior Manager Motor Industry Services at KPMG Australia, David Hanlin, Director of Universal Internet Services, and Mathew McAuley, Director of Marketing and Communications for Cox Automotive Australia.

Looking at the vast array of wholesale and consumer data and insights Cox Automotive brands such as Manheim and Dealer Solutions collects, it certainly appears there are early signs that consumers are returning to the new and used vehicle markets. Cox Automotive’s analysis showed that despite the decline in sales of new and used vehicles after the COVID-19 lockdown and moves to social distancing in late March, the month of May saw the beginnings of ‘green shoots’ and positive turnarounds. To find out more about Cox Automotive’s detailed analysis of the May market and some longer-term implications for digital retailing and online only auctions, please click the button below.

The Australian Women’s Leadership Symposia are a national series of events focused on the experiences of women leaders in the contemporary workforce. An unparalleled gathering of the best and brightest female talent, keynote speakers include Nova Peris, Ita Buttrose, Libby Trickett, Ann Sherry, Catherine Fox, Tammie Matson, Sallyanne Atkinson and many, many more. Due to COVID-19, the first three of these events will be delivered as both a one-day online event (over the next few months) and a one-day face-to-face networking session (much later in the year). With the health of our event delegates, speakers and sponsors our number one priority, we are adhering to the latest advice from authorities and may convert more of these events into a similar format as the situation unfolds. An attendance discount of 25% is currently available to attend by entering code ANSY20 at the time of booking (available until each symposium sells out). The 25% subsidy is in addition to any early-bird discounts that are already in place. A bonus webinar titled Leading Through Adversity Together is also included for new registrants.

The results of the third AADA and Cox Automotive Dealer Sentiment Index survey are in and Dealers report that they remain concerned by the state of the market, falling profitability and below average buyer traffic. The latest survey conducted in Q4, 2019 is based on the responses of 84 Dealers.

Other negative factors affecting Dealers are new vehicle inventory levels and credit availability which continues to create difficulties.

While the outlook looks somewhat bleak, Dealers report that parts and service departments are continuing to perform at reasonable levels.

Full Report

Last week CAANZ published guidance for businesses on the meanings of ‘safe’ and ‘durable’ in consumer guarantees in the Australian Consumer Law. This guidance was developed in response to stakeholder concerns about the meaning of these terms expressed during the 2017 ACL review. An earlier draft version of the guidance was released for consultation in January of this year. Stakeholder feedback was considered by CAANZ and formed the basis of a number of changes to the documents. CAANZ encourages stakeholders to review the guidance and distribute it as appropriate to their internal and external networks.

Mark Ward, National Leader in Automotive at BDO Australia has published an article on the current challenges in profitability and the 2018/19 financial year. Now is an opportune time to consider BDO’s FAST 15 checklist to ensure your Dealership is well positioned for the year ahead. Are you claiming back the GST on bad debts written off? Minimising and getting payroll tax, stamp duty, workers compensation, GST and FBT right?

The data released by the Australian Bureau of Statistics shows that the national fleet of registered vehicles increased by 1.7 percent over the past year, which is a much slower rate than the 2.1 percent that had been the steady rate of growth since 2015. Cars and Utes have increased by 1 car per 1,000 of population since 2018 with the ACT, NSW and NT sitting below the national average of 710 cars per 1,000 of population.

 

The average age of passenger vehicles in Australia remained steady at 9.9 years. Tasmanian cars were the oldest on average, at 12.4 years and the Northern Territory is the youngest, sitting at 9.3 years, just below the national average.

The average age of light commercial vehicles including Utes in Australia is older than passenger vehicles at 10.5 years. Tasmanian Utes were the oldest again, at 13.5 years and the Australian Capital Territory is the youngest, sitting at 9.4 years.

In comparison to overseas markets, the average vehicle age in the US is 11.8 years, in New Zealand it is 14 years while in the UK the average age is 8.1 years.