5th October, 2022 ยท CEO Message

CEO Message No. 80

2 minutes to read

Earlier this month I was invited to present at a conference in Barcelona held by CECRA, the organisation representing European Dealer Councils. The conference afforded me the opportunity to speak with European Dealers, but I also had the pleasure of spending time with friends from the North American Dealer Association and the Canadian Automotive Dealer Association. After the conference I travelled to the UK where I met with several Dealers and the AADA’s sister association in the UK, the National Franchised Dealer Association.

The trip showed me that despite the great distance between our respective markets, we are all facing the same challenges, although with nuances. Almost everyone I encountered wanted to talk about the Mercedes-Benz trial here in Australia and there was a strong sense that the automotive world was watching.

In Europe and the UK, agency is being spoken about by major brands and there is a sense of inevitability from Dealers about its introduction. However, many questions remain. European competition law requires OEMs adopting an agency model to take on all the risk, something several brands in that market are not comfortable with. Dual concepts of genuine agency and a non-genuine agency (where risk is still taken on by the agent) have emerged and there is major uncertainty how non-genuine agency models would work and whether they indeed are allowed.

AADA is in the early stages of considering the legal framework around agency in Europe and determining whether those learnings should have implications for Australia’s competition law framework.

On the transition to low and zero emissions vehicles, Europe and the UK is more advanced than Australia. One of the most profound statistics I heard was from a London Dealer who went from 2% percent of his annual sales being EVs to 65% in the space of two years! Now there are unique factors at play – he was a central London Dealer and congestion zones in that city allow EVs to enter free of charge, and he was also a large fleet Dealer servicing London taxis.

There is good reason for the UK’s progress – it is facing a 2030 ICE ban and there have been significant incentives on offer for several years. What’s more it took all of 5 minutes for me to work out that the kind of cars the Brits drive are vastly different to those that Australians drive. I saw very few utes and many small passenger cars. The UK also has more expensive petrol, better public transport, and the benefit of almost a decade of fuel efficiency standards.

Having said all this, battery electric vehicles are still only 15% of the UK market and their growth is slowing. There are concerns around charging infrastructure (especially for the high amount of people parking on the street), supply and affordability. 2030 is only seven and a bit years away and despite the UK’s progress, there is a long way to go. While we should look to other overseas markets for learnings, we should not forget the unique characteristics of the Australian market.