James Voortman
As Australia heads to the polls on 3 May, the AADA continues to advocate on behalf of our members to the major parties on pertinent issues. This advocacy resulted recently in the announcement from the Albanese Labor Government for new car and truck dealers. On 18 March, the Small Business Minister Julie Collins announced important changes which will benefit every dealer across Australia.
In short, the Federal Government committed to four things:
- Protecting all dealers from unfair contract terms (UCTs).
- Protecting all dealers from unfair trading practices (UTPs).
- Additional funding to the ACCC to enforce Franchising laws.
- Prioritising work for compliance with the NVES at the point of sale, rather than the point of import.
These measures will go some way to addressing the power imbalance which exists between dealers and OEMs. And these protections couldn’t come quick enough given the major changes reverberating across the global automotive industry.
The AADA continues to advocate for bipartisan support for these reforms, and they remain subject to consultation before eventual legislation. Nevertheless, we should not play down the magnitude of these changes.
Currently dealers with less than 100 employees are eligible for unfair contract terms protections. With this latest announcement, unfair contract terms will essentially be illegal for ALL franchise agreements. Without going into the finer details of what constitutes an UCT, it’s safe to say that historically Dealer Agreements have been littered with such terms. Dealers and their Dealer Councils will now be in a much better position to negotiate these terms out and achieve fairer agreements in the process.
Perhaps the most important part of the announcement was that all franchisees will benefit from new unfair trading practices prohibition. While it remains to be seen how UTPs will be defined under the law, we saw hints in the recent consultation process that one of the objectives would be that UTPs would require a lower burden of proof than the established concept of unconscionable conduct. The high bar to proving unconscionable conduct has recently been demonstrated in the dealer legal actions against Mercedes-Benz and Honda. Were UTP protections available to dealers in those actions, the outcomes may well have been very different. The other benefit of a UTP regime may well be that it empowers the ACCC to take action, where in the past it may have balked at the difficulty in proving unconscionable conduct.
Finally, the Government’s commitment to fast-track work on the point of compliance issue is testament to the work the AADA has done on this topic from the moment details of the NVES were revealed more than a year ago. If this change is not made, some OEMs will abuse the system and shift the risk onto their dealers, by leaving them with difficult to move stock. Moving compliance to the point of sale will ensure that OEMs account for realities in the marketplace. Simply put, the purpose of the NVES should be for more fuel-efficient cars to end up in the hands of consumers rather than sitting unsold in dealerships throughout Australia.
In summary, there are still processes to go through before we see these reforms realised. But the Government has made a crystal-clear commitment and there is no doubt that dealers will be better protected from some of the worst behaviours in our industry. These changes have come about because of the AADA, which has been empowered by the strong support and activity from our dealer members. There is no doubting the importance of dealers as contributors to our economy and to communities across Australia. They are businesses worthy of protection and our Government agrees.
In recent news, on Thursday President Donald Trump unveiled a 10% minimum tariff on most goods imported to the United States, with around 60 US trade partners subject to higher rates. This follows the announcement made on 26 March 2025 that imports of vehicles and auto parts into the US will be subject to a 25 per cent tariff.
While Australia has a Free Trade Agreement with the US, and as such, there is no tariff on US-produced cars which are imported and sold in Australia, deeply interconnected global supply chains mean that impacts on costs of manufacturing and distribution can be felt across the globe.
The AADA notes the significance of this announcement for global supply chain relationships and is monitoring any consequences for Australian franchised new car dealers.
