Automotive franchising protections
The concept of a power imbalance in the automotive franchising sector is well established, but franchising regulations in Australia continue to leave new car dealers exposed to exploitative behaviour. Dealers make significant non-negotiable investments in their businesses prescribed by Original Equipment Manufacturers (OEMs) as part of the franchising agreement, often resulting in a lopsided dependency. Dealers frequently lose bargaining power due to this dependency, leaving them at the mercy of OEMs who can leverage this imbalance to their advantage.
This structural imbalance can expose dealers to unfair commercial practices and place significant operational and financial risk onto local businesses. As the automotive industry undergoes significant technological and regulatory change, it is critical that Australia’s franchising framework provides dealers with appropriate protections and greater commercial certainty.
The AADA supports reforms that would:
- Introduce comprehensive Unfair Trading Practices protections for all franchisees
- Legislate an Unfair Contract Terms protection regime for all franchisees
- Improve access to justice and dispute resolution mechanisms for dealers
- Ensure franchisees are entitled to fair compensation for goodwill upon non-renewal or termination
australian consumer law - supplier indemnification
Australia’s franchised new car dealers play a frontline role in complying with the Australian Consumer Law (ACL) and supporting consumers when issues arise with vehicles and repairs. As customer-facing businesses, dealers are legally required to uphold consumer guarantee obligations regardless of a manufacturer’s warranty policies or internal processes.
While vehicle manufacturers are required to indemnify dealers for costs incurred in meeting ACL obligations, dealers frequently face complex claims processes, delayed responses, and burdensome audit requirements when seeking reimbursement. This can leave dealers exposed to significant financial and legal risk despite acting in accordance with manufacturer guidance and obligations under the ACL.
The AADA supports reforms that would:
- Improve manufacturer accountability in dealer indemnification processes
- Introduce clearer and more efficient pathways for ACL reimbursement claims
- Establish dealer protections where dealers act in accordance with manufacturer instructions
nves and ev transition
Australia’s automotive sector is undergoing one of the most significant transitions in its history as governments, manufacturers, and consumers move toward lower and zero emissions vehicles. The New Vehicle Efficiency Standard (NVES) will play a major role in shaping this transition and influencing the vehicles supplied to the Australian market.
The adoption of EVs will bring a range of economic, environmental, and social benefits to Australia. As zero and low emissions vehicles become more prevalent, new car dealers will play an important role in supplying those vehicles to the market, as they sell the overwhelming majority of new cars in Australia.
The AADA’s policy proposals highlight the franchised new car dealer industry’s support for an ambitious but equitable transition to lower and zero emission vehicles and detail a number of recommended measures which can assist in easing the compliance and regulatory burden of this transition on dealers.
Key Recommendations
- Move the NVES point of compliance to the point of sale
- Better align vehicle supply settings with consumer demand and market conditions
- Revisit requirements for entities captured under mandatory climate reporting obligations
- Support investment in EV charging and dealership infrastructure
budget and taxation
Australia’s automotive taxation system includes a range of federal and state-based taxes and charges which collectively impose significant costs on motorists and businesses. As the vehicle market evolves and the transition to lower emissions vehicles accelerates, Australia’s taxation framework must also modernise to remain fit for purpose.
Several automotive taxes were designed for a fundamentally different market environment and are increasingly misaligned with Australia’s transition to lower emissions transport. The AADA supports reforms that improve affordability for consumers, encourage investment, and remove outdated and distortionary taxes.
The AADA’s key Federal Budget priorities include:
- Support More Effective Franchising Relationships
- Safeguard dealers from unintended impacts of the NVES
- Revisit business incentives such as the instant asset write off
skills shortage
Workforce shortages across the automotive retail and repair sector are placing increasing pressure on dealerships, workshops, and consumers. Dealers continue to experience difficulty recruiting and retaining qualified technicians, particularly as vehicles become increasingly complex and the industry transitions toward electric and hybrid technologies.
Without a strong pipeline of skilled workers, workshop productivity declines, customer wait times increase, and businesses face growing constraints on investment and expansion. These challenges are often more severe in regional and remote areas.
The AADA supports policies that would:
- Support training and workforce development across the automotive sector
- Improve pathways into automotive trades and technical careers
- Encourage greater workforce participation across the industry
truck dealers
When Part 5 of the Code was introduced, it applied only to the franchised new car sector, overlooking the relationship between OEMs and truck dealers, which shares many similarities. These include high capital expenditure for facilities, stock, and trained personnel; the requirement for unique, specialized facilities; and truck dealers’ significant role as employers. Additionally, trucks are high-value, sophisticated products with extended after-sales relationships, and truck dealers provide vital community services like vehicle safety recalls.
Despite good relationships with OEMs, truck dealers often face unfair contract terms, burdensome administrative tasks, one-sided agreements, and non-renewal of contracts with little notice. The lack of protections in the truck industry, combined with a power imbalance and concentrated market, makes it difficult for dealers to negotiate or exercise their rights. The absence of coverage for truck dealers under Part 5 is an oversight, and given their significant investments, essential services, and the worsening power dynamics, stronger protections are urgently needed.
The AADA supports reforms that would:
- Extend Part 5 Franchising Code protections to truck dealers