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The peak body representing Australia’s franchised new car Dealers has welcomed today’s announcement by members of the Senate Education and Employment Committee calling for a full inquiry into the relationship between overseas car Manufacturers and Australian car Dealers.

“We support this inquiry which comes at a time when many Dealers are incredibly anxious about the future of the industry. We hope it will pave the way for reforms to protect Australian Dealers in the same way the US and EU protect their Dealers against the power of large car companies,” said AADA CEO James Voortman.

“GM’s treatment of its Holden Dealers sent shockwaves through the industry, leaving many to question how this was allowed to happen. We have since seen a range of other Manufacturers follow GM’s example and start including unfair and one-sided terms in Dealer agreements,” he said.

“There is plainly a massive power imbalance between Australian Dealers and the multinational car Manufacturers to which they are franchised. Dealers take on the majority of the risk and are compelled to invest very large sums of capital in facilities, personnel, stock and equipment, but are offered very little in the way of protection if a Manufacturer decides to terminate a Dealer, leave the country or completely change its distribution model,” Mr Voortman said.

“This inquiry is crucial as General Motors has now set a benchmark for other offshore car Manufacturers considering changes to their Dealer network,” Mr Voortman said.

“All Dealers are asking for is a greater degree of fairness which recognises the capital and the decades of service they and their employees have put into building a brand. Manufacturers are all Fortune 100 companies who can clearly afford to compensate their Dealers,” he said.

“The AADA is working closely with our members, and will cooperate fully with this inquiry,” Mr Voortman said.

 

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New car sales figures released today indicate an alarming decrease in sales of 28.8% for the month, the worst August result in 23 years and the 29th month in a row of falling sales.

“Yesterday Australia entered its first recession in nearly 30 years, but the new car industry has been in recession for nearly 30 months,” said AADA CEO James Voortman.

“The numbers in Victoria are particularly alarming with a 66% contraction in new car sales and Dealers in that state are hopeful of an announcement on Sunday that will allow them to return to trade,” Mr Voortman said.

“Dealerships are well placed to observe COVID-safe plans and already have measures in place, in preparation for when restrictions are eased. We will be asking the Victorian Government to allow us to reopen responsibly so we can start servicing our customers,” he said.

“The JobKeeper program has provided valuable support for Dealers and kept thousands of people employed, but more is needed as we face uncertainty,” he added.

The AADA is urging the Federal Government to provide assistance through measures such as adjusting responsible lending laws to free up much needed finance, extending the instant asset write-off scheme and totally reviewing the automotive taxation scheme which is a legacy of a bygone era designed to protect a local manufacturing industry that no longer exists.

“Given the uncertainty and disruption in the market, the August result is very concerning because it means businesses are under severe stress and people are losing their jobs. There is a path forward however and we need our federal and state leaders to work together, listen closely to what industry are saying and guide us to a recovery,” Mr Voortman said.

 

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The Australian Automotive Dealer Association’s submission to ASIC’s proposed intervention order on the sale of automotive add-on insurance and warranty products has expressed concern that the intervention will further harm the industry and its ability to service its customers.

ASIC’s revised proposed intervention order comes at a time in which the industry is struggling amid historical declines in new car sales.

“This year, we are on track to have the worst new car sales result in two decades and the steepest decline on record. Dealers are focussed on keeping the doors open and holding onto their employees and unnecessary regulation will only compound their situation,” said AADA CEO James Voortman.

“Our members in Melbourne have been forced to close their doors and all Dealers are feeling the pressure from the effects of the pandemic. If issued, this intervention order will risk further economic harm to Dealers and limit their ability to sell credible insurance products to customers in need,” said Mr Voortman.

“ASIC’s scrutiny of these products in recent years has had the desired effect, leading to a capping of commissions, insurers withdrawing from the market and improvements in insurance and warranty products. Consumers have benefitted from improved insurance and warranty products and ASIC should be commended for the role they have played in driving these outcomes,” he said.

“Instead of denying consumers the ability to purchase reputable insurance and warranty products, the focus should be on those poorly constructed products available for sale. ASIC should target the design of these products rather than the sales process and channel through which such products are sold,” he said.

“We remain of the view that ASIC’s work is a duplication of the effort being led by Treasury which is working on a whole of economy model,” he said.

“We would hope that by aligning the automotive industry with the rest of the economy, new car Dealers will be able to assist customers that have genuine need for appropriate insurance products,” he said.

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The peak body representing new car Dealers has expressed concern over General Motors’ (GM) announcement that it will be launching a new vehicle brand.

“The launch of GMSV poses many questions and it seems unthinkable that shortly after ruthlessly dismantling the Holden Dealer network GM can simply be allowed to launch a new brand,” said AADA CEO James Voortman.

“GM remains in dispute with a number of Dealers and most who have settled did so under duress, accepting the inadequate compensation on offer. Even a last minute request from the Federal Government to settle the dispute through arbitration was rebuffed by GM,” he said.

“GM has burned so much goodwill after taking so much from Australian taxpayers, yet here they are about to start another business,” he said.

“After a decade of treating consumers, businesses and the Government with contempt, how can we have faith that GM will change its ways,” he said.

“Over the past two years we have seen the ACCC successfully take action against a number of Manufacturers. We are also seeing Honda and Mercedes-Benz making significant changes to their distribution models. We really do need stronger franchise laws similar to those in the United States,” said Mr Voortman.

“We know Senator Deborah O’ Neill has written to ASIC asking them to investigate a potential phoenixing situation regarding GMSV. We also know that last year, only months before announcing it was dumping the Holden brand, General Motors changed its corporate structure,” he said.

“It is important to get to the bottom of these issues as GM will have significant liabilities in Australia for many years to come,” he said.

“There are 1.6 million Holdens on our roads, the second most of any brand. The Government needs assurances that General Motors has set aside funds to honour consumer law obligations, pay warranty claims, complete safety recalls and supply vehicle parts,” said Mr Voortman.

“The Senate Inquiry looking into GM’s operations in Australia should strongly consider calling GM back to answer more questions,” he said.

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The peak body representing new car Dealers has welcomed the Government’s changes to the JobKeeper 2.0 program.

“The changes announced today will provide car retailers and their employees in Victoria and throughout Australia with a great degree of comfort during a very difficult and uncertain time,” said AADA CEO James Voortman.

“These changes will help save jobs and on behalf of the industry, I would like to thank the Treasurer and the entire Government for listening and taking on board concerns articulated by the many businesses across the country,” said Mr Voortman.

“Under the previous criteria, the industry was facing a situation in which very few, if any, car Dealers would have been able to access JobKeeper beyond 27 September. The changes are very welcome because Dealers in Victoria are facing an extremely difficult period and it is very unclear what lies ahead for the industry in general over the next six to twelve months,” he said.

“It’s been a very challenging environment for Dealers over the past two years compounded by the pandemic. Dealers across Australia are incredibly grateful for the stimulus measures the Government has provided to encourage consumer demand and allow Dealers to keep on employees,” said Mr Voortman.

New car sales have been declining for 28 months in a row and the last few months have seen some of the lowest sales numbers in decades.

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The Senate Inquiry into General Motors’ Holden Operations in Australia will hold public hearings today. Australian Automotive Dealer Association (AADA) CEO, James Voortman, will appear and answer questions on behalf of Australia’s franchised new car Dealers. For a copy of the opening statement, click here.

“The last six months have been a very difficult time for many Australians and for Holden Dealers it has been made worse by the actions of General Motors,” said Mr Voortman.

“GM needs to be held to account for the way it misled Dealers and for its failure to offer Dealers fair and reasonable compensation. It also needs to answer to the Australian taxpayers which provided it with billions in subsidies,” he said.

“GM’s actions saw both sides of politics combine to launch this Senate Inquiry, it has led to the ACCC pressuring them into mediation and has drawn pleas from Federal Ministers for them to participate in arbitration,” Mr Voortman said.

“We are asking the committee to recommend a strengthening of Australia’s automotive franchising regulations to protect local businesses against the heavy-handed behaviour of some car Manufacturers.”

“One of the key elements required to level the playing field is the ability for binding arbitration when mediation fails,” he said.

“While Holdens will no longer be sold in Australia, 1.6 million vehicles remain on our roads and GM need to demonstrate how they will fulfill their consumer law obligations and do the right thing by consumers and the servicing Dealers,” he said.

The Senate Inquiry is scheduled to deliver its report into Holden on 12 November, 2020.

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New car Dealers are encouraged by June sales figures which show a significant improvement on the May result, however, one good month does not equal a recovery.

“This is a good outcome for the industry, but we need to keep some perspective. It is still more than 7,500 units down on June 2019 and stands as the 27th month of consecutive decline in sales,” said AADA CEO James Voortman.

“This result is a sign that incentives like JobKeeper and the instant asset write-off scheme are helping and is no doubt reflective of the easing of restrictions caused by the pandemic and some really appealing end of financial year deals,” said Mr Voortman.

“Moving into the third and fourth quarters however, we see some big challenges ahead. JobKeeper is scheduled to end in September and we are hearing from Dealers that car buyers are still struggling to secure finance. This has been an issue since the release of the Financial Service Royal Commission recommendations and has been compounded by the COVID-19 pandemic,” said Mr Voortman.

“The big question now, is what can we do to keep the June momentum going? The economic activity generated by our industry is a substantial contributor to employment and taxation revenue. The Government needs these things more than ever, so we think the time is right to look at ways in which consumer credit can be freed up,” he said.

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General Motors’ (GM) deadline to its Dealers to sign up for its compensation offer has arrived today and many Australian businesses have been left with no choice but to reluctantly accept the unfavourable terms put to them.

GM flat out refused a Federal Government request to extend the deadline and refused to participate in arbitration with its Dealers.

“Over the past four months, 184 Holden Dealers have remained united in their opposition to the grossly inadequate offer of compensation from GM. Ultimately, GM’s complete unwillingness to negotiate and the prospect of a costly and lengthy court battle has had the desired effect,” said AADA CEO James Voortman.

“GM has annual revenues of $200 billion and the prospect of fighting them in court was just not an option for many of the dumped Holden Dealers,” he said.

“GM’s actions saw both sides of politics combine to launch a Senate Inquiry, it has led to the ACCC pressuring them into mediation and has drawn pleas from Federal Ministers for them to negotiate in good faith,” Mr Voortman said.

“At every turn, GM has thumbed its nose at local Dealers, the Australian Government and by extension the Australian public, the same public which provided the company with more than $2 billion in taxpayer funded assistance,” he said.

“This has set a dangerous precedent and Australia urgently needs to strengthen its Automotive franchising regulations to protect local businesses against the heavy-handed behaviour of some car Manufacturers,” he said.

“If we do not act this will happen again. The choice is clear, do we want laws which ensure local Australian Dealers are treated fairly or do we want laws that allow offshore Fortune 100 car companies to treat these local businesses and their employees with disdain,” Mr Voortman said.

“AADA will continue to advocate for urgent changes to automotive franchising regulations, but we will also try and ensure that GM is called to account in the coming Senate Inquiry,” he said.

“GM’s Senior Management needs to front up to the Senate Inquiry and answer a range of questions, such as when they first knew that Holden would be withdrawn, why they mislead Dealers and consumers about their commitment to Australia, why they refused fair compensation to Dealers and the details of its new General Motors Specialty Vehicles business,” Mr Voortman said.

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