1st June, 2021 · Media Release

Auto Franchising Reforms Good News for
Car Dealers

The peak body representing franchised new car Dealers has welcomed automotive franchising  reforms which will bring greater fairness to the commercial relations between Australian car Dealers and car Manufacturers.

The new regulations released as part of significant changes to the Franchising Code of Conduct will take effect as of 1 July 2021 and provide Dealers with more certainty in terms of the investment they undertake and the compensation they are entitled too. It will also ensure that new agency models are subject to these rules. Dealers will also benefit from changes to the Franchising Code, including improved disclosure and restriction of franchisors to unilaterally vary agreements.

“These reforms are all about fairness and Australian Dealers will now be in a better position when a car Manufacturer leaves the country, reduces its network or changes its business model,” AADA CEO James Voortman said.

“I congratulate the Morrison Government for standing up for Australian Dealers and implementing these changes. We also look forward to working with the Government on the upcoming consultations on dispute resolution and the merits of a separate automotive code,” he said.

“These changes come after a difficult 18 months for Australian Dealers which saw Detroit-based General Motors terminate every Holden Dealer without adequate compensation. It is clear that other Manufacturers are considering making changes to Dealer networks which is why these reforms are so important,” he said.

“These changes will bring a degree of balance to the relationships between new car Dealers and the Manufacturers to which they are franchised. The reforms are sensible and fair and will bring all Manufacturers up to the standard already being employed by ethically-minded car brands operating in Australia,” he said.

“Dealers in regional towns and cities all across the country will be welcoming these reforms. In particular, I need to acknowledge the work of Minister for Small and Family Business Stuart Robert and his predecessor the Attorney General Michaelia Cash,” Mr Voortman said.

“Automotive dealerships are important local businesses which employ Australians, invest in Australia and pay their tax in Australia. Dealers look forward to healthy commercial relationships with their Manufacturers, so we can continue to bring many benefits to Australian consumers and communities,” he said.

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