14th December, 2021 ยท Media Release

Dealers Welcome Moves To Strengthen
Indemnification Under ACL

The AADA has welcomed consultation on options to ensure businesses comply with the consumer guarantee provisions in the Australian Consumer Law.

“New car Dealers are very much focused on providing their customers with a first-class experience and we welcome the Government’s efforts in trying to ensure compliance with consumer guarantees,” said AADA CEO James Voortman.

‘It is encouraging that the regulation impact statement has identified options to strengthen supplier indemnification. The ACCC’s market study into the new car industry highlighted the issue of Manufacturers not indemnifying their Dealers,” he said.

“Too often Dealers, which are the suppliers under the ACL, are the meat in the sandwich caught between the customer and the Manufacturer of the vehicle when there is a request for a remedy” Mr Voortman said.

“Motor vehicles are a high value purchase and require ongoing maintenance which is often conducted through the Dealer network. Dealers often suffer significant financial loss by replacing or refunding a vehicle only to be told they will not be indemnified,” said Mr Voortman.

The AADA has previously expressed concern around practices such as warranty extrapolation and denial of warranty payments as well as terms in franchise agreements, which:

  • prohibit Dealers from making admissions of liability without prior approval of a Manufacturer;
  • require Dealers to obey Manufacturer instructions in relation to a consumer’s request, complaint, claim or legal proceeding; and
  • state Dealers will lose their right of indemnity if they did not adhere to such Manufacturer instructions.

The AADA looks forward to working with the Government and other stakeholders through this consultation process.

 

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