8th June, 2021 ยท CEO Message

CEO Message No. 65

2 minutes to read

Almost every new car Dealer will tell you that over the past five years the number of customers requesting refunds or replacements of motor vehicles has ballooned. Consumer guarantees are not new, and customers whose vehicles have major faults are entitled to reject their goods and seek a refund or replacement from the Dealer. However, there has been a growing awareness from consumers of these rights in recent years, leading to many more such claims.

The law is very clear, the customer has the right to reject a good and request a refund or a replacement from the Dealer. The Dealer for its part has the right to be indemnified by the Manufacturer. In theory this is very simple, in practice it seldom is. Especially, when dealing with a modern motor vehicle and all its complexities. Consumer claims have to be tested and too often Dealers can get stuck between a consumer requesting a remedy and a Manufacturer pushing back against setting a precedent.

Dealers need to have good relationships with both their customers and with their Manufacturers, but the warranty and consumer guarantee issue makes it very difficult to achieve both goals. Dealers often end up wearing the cost by assisting a customer and not testing the friendship with the OEM by enforcing indemnification rights.

This trend is here to stay, and it is more important than ever that the Consumer Affairs Forum makes good on its commitment to review indemnification processes in the automotive industry.

A case that highlights this issue is a recent decision in the Supreme Court of Victoria that the Dealer and the OEM, Mitsubishi, misled a consumer through use of the fuel consumption label.

While this decision pertained to the misleading and deceptive conduct provisions rather than the Consumer Guarantees provisions of the Australian Consumer Law, it highlights how liability under the ACL can be jointly apportioned. It beggars belief that a Dealer could be held liable for the application of a sticker (which must be applied by law) detailing the results of an emissions test conducted by the Manufacturer under the supervision of the Government.

The AADA will be taking these issues up with Government, but we also encourage all Dealer councils to work with their OEMs so that Dealers are not adversely affected by issues beyond their control.