19th October, 2016 · AADA Convention

Dealers need to understand their power

7 minutes to read

It is more important than ever that retail automotive Dealers band together and use the power of their collective voice, the expert industry panel concluded at the 2016 AADA National Dealer Convention.
Moderated by veteran industry journalist John Mellor, the panel featured AADA Chairman Terry Keating, AADA CEO David Blackhall, FCAI CEO Tony Weber and Australian Motor Dealer Council (AMDC) Chairman Doug Dickson.

Mr Mellor said the NSW government shutting down the greyhound racing industry was an example that “governments are starting to act with an apparent indifference to the community, in a way that is beyond reasonable”.

“You have to ask if governments are so strident in these matters, how sympathetic will they be when it comes to decisions that affect the futures of car retailers and the motor industry?” he said.
“Sitting back and expecting others to fight your fights for you is simply no longer an option. So the time seems to be very opportune for Dealers to take more responsibility for their futures.
“Dealers need to get the data that paints the true picture of this industry. There are too many decisions made by politicians and bureaucrats based on half-truths and lies.”

Mr Mellor reminded Dealers that they contribute a lot to communities and should use that influence on the people who vote politicians into power. “It would be very powerful.”

A united voice

Mr Dickson emphasised that with automotive manufacturing set to cease, Dealers could no longer rely on manufacturers to fight their battles for them.

“Previously, with many, many years of manufacturing, there was somebody who always ran interference for dealers,” he said.
“They didn’t really have to worry; it might have been their factory or somebody in a high place who would run interference if Treasury wanted to start an ACL (Australian Consumer Law) investigation. All of that’s gone.
“The difficulty is that Dealers have for so long not had to concentrate on external issues, therefore the local issues become much more important. They really don’t have the mind space or time to start worrying about external issues. We’ve got, in my view, a big education process to go through, not just with politicians.”

Mr Weber said Dealers had to consider how they were going to be able to influence the government once factories were no longer such a strong presence.

“The advantage we’ve always had with manufacturing is we’ve always had a lot of foot soldiers,” he said.
“Before Ford went, there were 50,000 people directly employed in manufacturing. They will quickly be gone. So we now need advocates across the country; we need soldiers on the ground. And the reality is that they come from the Dealer network because that’s where we have the most employment and that’s where we have the most power. Regardless of whether you’re in the north of Queensland or down in Tasmania, we have, in all those electorates, dealerships. They are a very powerful force and we need to get that message out.”

Mr Keating agreed that it was vital for Dealers to take ownership of their issues.

“All of the new car Dealers in this country need to share in some way the workload that we take on,” he said.
“We need to have every franchise a member of our association. We’re close to that but we’re not 100 per cent. NADA’s not 100 per cent. In Australia we could be, and then we could really and honestly say to the government ‘we are the motor industry’.”

Mr Blackhall said Dealers needed to understand the power and influence their voice could have with politicians.
“Cutting through the misinformation to real information is a constant challenge. Politicians are interesting people. They are there on the whim of the electorate and if they get a sense that something’s out there that might win them some votes or lose them some votes, they get very interested in those issues. Getting them to understand the real facts is a challenge,” he said.

Parallel imports

Mr Mellor said the government’s decision to allow parallel or private imports, supposedly because Australians were paying too much for their cars, was based on a false assumption.

“New Zealand, which has parallel imports, is held up as the paragon of low new car prices. Yet, in spite of New Zealand also having the added downward pressure on new car prices from a used car import industry, the notion that Australians pay more for our new cars than Kiwis is simply not true,” he said.
“There was a recent survey in the UK that found Australia had the third-lowest car prices in the world, behind India and Russia.”

He said the only time Australian cars are more expensive than New Zealand is when they are subject to the Australian Government’s Luxury Car Tax.

Mr Weber said the ability for consumers to buy anything and everything online had led to the belief that this should extend to cars, despite the obvious differences.

“People buy handbags, they buy pairs of shoes over the internet, so the question is: ‘Why can’t I buy a car? What’s different?'” he said.
“And that’s what we need to actually spell out. People, once you can spell it out, actually understand that. I’ve spoken to a lot of backbenchers on this issue. I’ve spoken to more backbenchers on this issue than any other. Some have no knowledge of it whatsoever, but a lot of them have a lot of knowledge. They get it. The ones who get it have had time and spoken to Dealers in their electorates and the Dealers can spell it out to them – the danger, what it means.
“The problem with the personal imports debate is there’s no silver bullet. But if you put a number of the bullets together and talk to them, they get it. The car is actually different to the handbag, because the car remains on the roads in Australia for 20 years; it has multiple owners and it needs to be serviced. And it can kill you. Not many people getting killed by their handbags. And that’s where it’s different.”

Mr Weber said he had spoken to a lot of members of the National Party, whose NSW members recently voted amongst themselves to reject personal imports. Likewise, he had spoken to Liberal Party members, many of whom ‘get it’, while the Labor Party had made it clear it would oppose personal imports. He has also talked to the Greens.

“You start to do the numbers and whilst you can never guarantee the numbers, you start to look at this from a pragmatic position about where this belongs in the whole scheme of all the legislation that goes through and the probability of it going through.
“That’s why the great work amongst some Dealers in actually telling the story to their backbenchers has been so powerful, because what we’re doing in Canberra is being reinforced by what they’re being told in their electorates.”

Right to repair

The panel dismissed the issue as a whole lot of noise made by independents attempting to steal business from franchised Dealers. Mr Mellor pointed out that the VACC website has extensive repair information available free of charge and even more content for just a few hundred dollars, yet only 90-odd independent repairers had taken it up.

Mr Weber said he had never come across anyone who can’t get their car repaired in Australia.

Mr Blackhall said he had attended a press conference called jointly by the Australian Automotive aftermarket Association (AAAA) and then-Senator Ricky Muir to lobby the government for free access to service repair information.

“Statements were made, on the public record, that basically said ‘if you’ve got an independent repair shop, tell your customers to get in touch with the politicians and complain about the fact that we can’t get all the data we need, but don’t ever tell them that you can’t fix their car, because we know, don’t we, that we have ways of getting that data anyway’,” he said.
“And this was a statement by Mr Charity (AAAA Executive Director, Stuart Charity). To me, it’s a cynical, cynical attempt to enter our value chain and destroy a business that we’ve created and built.
“Talk to regional car Dealers in particular. They rely on independent workshops to take overflow work, to work in partnership with the independent shops. Most Land Rover Dealers are not the slightest bit interested in fixing a 35-year-old Land Rover. Sorry, we just don’t carry the parts, the technology is so old we don’t even know how to do those carburettors any more or whatever, and if there’s a Land Rover repairer I can send you to, I will, because that helps me build a relationship with you, get some business out of my workshop I don’t want anyway, and maybe you’ll buy a new Land Rover in the future.”

Mr Blackhall said independents were trying to paint Dealers as big corporate monsters suppressing ‘the little Aussie battlers’.

“This whole fantasy that Stuart (Charity) tries to peddle about – that we are ugly, ugly children of the grasping multinationals who want to put the little Aussie battlers out of work – give me a break. We want to work with those guys and, by the way, the grasping multinationals who make us into Dealers. These Dealers that they create are family-owned, family-grown, family-run businesses,” he said.
“It’s fact versus fantasy, and in this debate the fantasy has held sway for a long time.”

ASIC investigation

David Blackhall: “What do regulators do? They regulate. So my status on this is that there will be a regulation of some kind. That is what they are in business to do. Our job was to work with them to help them…understand the true facts about flex-commissions, origination fees, and the impact that prohibition would have on our business. We were able to show them, through a modelling exercise that we undertook, that the impact if they went forward with their original proposals was catastrophic.”

Terry Keating: “I guess we’re seen as a pretty easy target. We know with the deliberations we’re going through at the moment with ASIC in trying to get the future of flexi finance to a fair and reasonable outcome.
“We’re pretty sure that they picked on us because we’re an easy target. No doubt that organisation was under pressure to get some results, because they’ve been publicly slated for not getting results. You would like to think there are bigger and better targets than us, but we probably are the easy one. Having said that, we need to defend ourselves against these things. I think we’ve got a lot of logic, a lot of common sense, on our side, but to get the most effective response  we first of all need to have all of our team on board.”
The future

Tony Weber: “There’s misinformation about not only the contribution of the industry going forward, but also about what the industry can bring in terms of technology. I think cooperative intelligent transport systems is one of the most interesting areas. It can transform our roads – in terms of safety, environment, and even in terms of congestion.

“This is not a pipe dream; this is a reality that’s going to hit the roads around the world in the next 18 months or so, and it will be on our roads very shortly.”