6th December, 2021 ยท CEO Message

CEO Message No. 71

2 minutes to read

As we reflect on 2021 from a AADA perspective, it has been a successful year. Most importantly, it has been a good year for the industry as strong demand for new and used vehicles has persisted throughout the year.

Amid the favourable trading conditions, there have been plenty of distractions for Dealerships in the realm of automotive franchising relations.

From a regulatory perspective we saw the Federal Government introduce landmark reforms which saw the introduction of automotive-specific regulations in the Franchising Code of Conduct. These were hard fought reforms and a credit to all the Dealers who made the effort to take these issues up with their local member of Parliament. However, laws and regulations in themselves will not necessarily remedy the power imbalance. Laws need to be tested and precedents set.

We currently have several Dealers from various brands locked in legal action with their OEMs. None of these Dealers particularly want to be fighting OEMs in court – they’d clearly prefer to be 100% focused on their businesses. All these Dealers would have rather settled their disputes outside of the courts and I’m sure the same can be said for the OEMs involved.

We are clearly facing a time of great change in our industry and manufacturers are feeling the pressure to future-proof their businesses. Our message to manufacturers is that when you are seeking to make changes to the distribution model you should work with your Dealers, your business partners. OEMS and Dealers bring very different skill sets to the table and over many decades they have complemented each other. We believe the Dealer has a vital role to play in the future and we would hope OEMs see that too.

As we enter 2022, there will be further headlines about court cases which pit Dealers against their OEMs. On occasion this cannot be avoided, but on many other occasions it can be avoided. There is much to be gained by negotiations conducted in good faith in which both parties share the costs and the benefits of any changes; in which recognition is given to the longstanding partnerships and sunk investment; and in which every possible effort is made to listen to each party’s rationale and grievances.

This is what Dealers want more than anything – a strong relationship with their OEMs and fair and reasonable treatment when changes are made. A number of manufacturers already adhere to this mantra, but we would encourage all to do so.

From the AADA Secretariat – thank you for all the support from Dealers and associated industries across 2021. We are looking forward to working hard for the great people of this industry in 2022.