Media Releases Archive - Page 14 of 17

Dealers Welcome Measures to Stimulate The Australian Economy

The peak body representing Australia’s franchised new car Dealers welcomes the Government’s measures to stimulate the Australian economy.

“The new car market has been in recession for almost two years and Dealers will be hopeful that these measures breathe some life into an industry that is on the ropes,” said AADA CEO James Voortman.

“The expanded instant asset write-off is most welcome and will allow many more businesses to make use of the scheme to invest in a much larger range of vehicles,” he said.

“This measure will run until 30 June and I urge businesses to make use of this scheme to purchase a vehicle from their local Dealer,” said Mr Voortman.

“The extent of this industry-specific downturn cannot be underemphasised, and we will be urging the Government to extend the instant asset write-off beyond 30 June and to consider additional measures to encourage consumers to purchase new cars. Similarly, while we welcome the announcement of a time-limited 15 month investment incentive, the downturn in our industry means investment programs will likely remain subdued,” he said.

“We urge all State Governments to follow the lead of the Federal Government and adopt stimulatory measures. Stamp duty exemptions on the sale of new cars would facilitate renewal of the fleet, leading to safer, cleaner and more efficient vehicles,” Mr Voortman said.

“Dealers have high turnovers due to the high value of their products, but profit margins are incredibly slim at less than 1%. Due to these higher turnovers Dealers have missed out on some of benefits announced for smaller businesses. We would urge the Government to consider our unique circumstances,” he said.

The AADA will keep the Government up-to-date on the latest sales trends and will inform them on the need to extend or re-evaluate on the recently announced measures.

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The Automotive Industry is already in Recession and needs Urgent Stimulus

Peak bodies in the automotive sector have called on the Government to deliver much needed stimulus for the depressed industry, now also feeling the associated effects of the COVID-19.

“The industry is in the midst of a prolonged downturn. Sales of new cars have contracted for 23 straight months representing a sustained recession and a situation significantly worse than the GFC which saw 15 months of decline,” said Federal Chamber of Automotive Industries CEO Tony Weber.

“The 2019 calendar year saw new car sales down 7.8 percent, the largest annual reduction in sales since recordkeeping started nearly 30 years ago,” said Mr Weber.

The decline in the industry has already forced many of the nation’s 3,200 new car dealerships to lay off staff and some dealerships, particularly in regional Australia, have been forced to close their doors.

“Make no mistake, this is an industry in urgent need of assistance. Many dealerships are at breaking point and if the situation persists, there will be severe consequences for these businesses and the people they employ,” said Australian Automotive Dealer Association CEO James Voortman.

“We are calling on both the Federal and State Governments to stimulate this industry which has been going backwards and now faces further tough times amid this market uncertainty,” said
Mr Voortman.

There are fears that the existing downturn affected by a tight credit market and low consumer confidence will be compounded by the fallout from COVID-19. New car Dealers are located in almost every city and country town across Australia where they employ people, take on apprentices and make a significant contribution to the local economy. Nationally, they are strong contributors to the nation’s tax base.

“The Australian motor vehicle industry represents a substantial segment of the Australian economy and as such it is vital that we ensure its continued health during a time of vulnerability and weakened consumer confidence,” said National Automotive Leasing and Salary Packaging Association Chairman Rob Bazzani.

The Government should move fast to stimulate the sale of new cars which aside from the demonstrable economic benefits, bring societal benefits as they are safer, cleaner and more efficient than the older cars they replace.

Options for stimulus include:

Rebates for the purchase of new cars
Tax relief for new car buyers (GST, import tariffs, Luxury Car Tax)
Investment incentives for businesses buying new cars

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Dealers Support Senate Inquiry Into Holden Withdrawal

The peak body representing Australia’s franchised new car Dealers has welcomed today’s announcement of a Senate Inquiry into the decision by General Motors (GM) to withdraw the Holden brand and operations from Australia.

“As an industry we were shocked by GM’s decision and the way it was communicated. However, we have been even more shocked by reports from our members on the grossly inadequate compensation on offer,” said AADA CEO James Voortman.

“The withdrawal of GM from the Australian market leaves around two hundred dealerships in the lurch, and up to nine thousand workers out of a job,” Mr Voortman said.

“Holden Dealers invested significant capital in facilities, stock and equipment. Many signed up to long term leases. They employed people in their businesses and took on apprentices. All of these decisions were made in good faith based on commitments from Holden that they were in Australia for the long-haul,” Mr Voortman said.

“This inquiry is crucial as the way in which Holden is allowed to exit Australia will set the benchmark for other offshore car Manufacturers considering an exit from the country, a rationalisation of their network or a change in their distribution model,” Mr Voortman said.

“The decision of the Senate to review the impacts of GM’s decision is very welcome, particularly as it will also look at the broader context of the Franchising Code and its role in this mess,” he said.

“We look forward to working with the Senate on this inquiry and to keep the Prime Minister, whom we met with yesterday, abreast of developments,” Mr Voortman said.

“The AADA is working closely with our Holden members, as well as the Government and Senate to ensure that the hard-working Australian businesses and their employees are properly looked after,” Mr Voortman said.

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Holden Closure: Decision Made In Detroit Will Hurt Local Business

Local car Dealers and their employees will bear the brunt of General Motors’ decision to kill off the Holden brand in Australia, highlighting the need for strong Automotive franchising laws.

“There has been a lot of talk about the 600 jobs that will be lost at Holden’s head office. These amount to very little compared to the people employed in Holden dealerships both in regional and metro Australia, a figure which could be as high as 6,000,” said AADA CEO James Voortman.

“As I have spoken to Holden Dealers in the past 24 hours, I am struck by how poorly this was all done. It is clear that the local management of Holden were blindsided by a decision made in Detroit,” he said.

The AADA welcomes the announcement by Holden that they will put in place “appropriate transition arrangements” for Dealers but we need to see the detail of these arrangements. Australia’s impotent and ineffective franchising laws leave Dealers exposed when it comes to end of a term arrangements, especially in this case which is a complete withdrawal from the Australian market, directly affecting around 200 Dealers.

“Dealers typically own millions of dollars’ worth of vehicle inventory, special tools and equipment, parts and bespoke facilities built to the exacting specification of the manufacturers. On top of that, Dealers have often invested in long term leases, extending to a decade or more for these facilities. We know of Dealers who are in the process of spending significant capital in upgrading or building showrooms, an investment demanded of them by Holden. There are also Holden dealerships that have changed hands through a sale process recently,” said Mr Voortman.

We expect that these investments and commitments will be taken into consideration by Holden when they decide on compensation packages for Dealers.

Dealers enter into franchise agreements with Manufacturers and make these investments in good faith. It is essential that this is recognised and compensated for at the end of the term.

“It is hard to believe that a global Fortune 500 company such as General Motors did not anticipate this decision and questions need to be asked as to why Dealers were allowed to invest significant sums of capital in recent times to grow a brand that was going to be withdrawn,” he said.

“I think it would have been appropriate for the Global Head of General Motors to travel from Detroit to Australia and make the announcement in person that they have decided to kill off one of Australia’s most iconic brands,” he said.

“This just highlights the massive power imbalance between multinational vehicle Manufacturers and local car Dealers. Simply put Australia needs strong automotive specific franchising laws similar to those in the United States,” said Mr Voortman.

The AADA which represents all Holden Dealers will be writing to the Prime Minister to request a meeting with a delegation of Holden Dealers to discuss the effects of this decision on Dealers, their employees and customers.

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Closure of Holden Affects 200 Dealers Across Australia

Today marks a sad day for Australia with the news that General Motors (GM) will be retiring the Holden brand this year.

“This news will come as a hammer blow to Australia’s 200 Holden Dealers, their employees and their customers. Our thoughts are with all of those affected by today’s announcement,” said AADA CEO James Voortman.

“Holden is an iconic Australian brand with one of the biggest Dealer networks in the country and the social and economic effect of this development should not be underestimated,” he said.

“This was a decision made in Detroit and highlights the vulnerable position in which franchised new car Dealers can find themselves. It underscores the importance of the decisions the Government will be making on the future of Automotive franchising in Australia,” he said.

“It is crucial that these Dealers are adequately compensated for the significant investments they have made in capital, time and effort over many many years,” said Mr Voortman.

“GM has announced that Holden will honour all warranties, servicing offers made at time of sale and recall and safety-related issues. Dealers will naturally step up and help service the large base of Holden customers,” he said.

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Automotive Franchising Regulations Need Strengthening

The peak body representing Australia’s franchised new car Dealers has expressed disappointment with the Government’s draft automotive franchising regulations.

The regulations are intended to address the major power imbalance between new car Dealers and offshore vehicle Manufacturers but fall well short and will continue to leave Australian Dealers vulnerable.

“Australia’s car Dealers need strong regulatory protections similar to those in force in other advanced countries. Unfortunately, the regulations as drafted will have very little effect on the status quo,” said AADA CEO James Voortman.

“Global car Manufacturers are using Australia’s lax regulatory regime to squeeze their Dealers and they see our market as an ideal place where they can experiment with alternative distribution models, usually at the expense of Dealers. Such behaviour is simply not possible in a country like the United States which does have strong automotive franchise laws,” he said.

“It is so important that these regulations are bolstered before they are finalised, particularly at this time when sales of new cars have been going backwards for 22 months and a number of regional dealerships have had to close their doors,” he said.

“The biggest factor influencing the power imbalance is insecurity of tenure for Dealers. It was identified by the ACCC as an issue of concern in its retail market study, but to date it has been left out of the draft regulations,” he said.

“There are Dealers in Australia who over the course of many years have invested millions of dollars in facilities, stock and equipment at the behest of Manufacturers, only to be given a one-year agreement. To put that into perspective there are fast food franchisees with substantially lower capital investment requirements which are given 20-year agreements by their franchisor,” he said.

“While we acknowledge improvements in end of term obligations, Manufacturers are still not required to purchase back the stock which they have compelled their Dealers to purchase from them,” Mr Voortman said.

The key issues of Dealers being denied warranty payments and Manufacturers pressuring Dealers to dismiss ACL claims from consumers have also not been covered in these regulations.

The AADA believes it is crucial that these draft regulations are strengthened before they are finalised and will be raising concerns directly through the consultation process.

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AADA Calls on Regulators to Stamp Out False Reporting of Car Sales

Key facts:

U.S. regulator Securities and Exchange Commission (SEC) clamps down on false reporting practices, Australia should follow suit.
Fake sales reporting can adversely impact consumers by eating into new car warranties.
Fake sales reporting undermines the credibility of data relied upon to assess Australia’s economic health.

The Australian Automotive Dealer Association (AADA) has urged regulators to stamp out the practice of falsely reporting vehicle sales figures, potentially harming consumers, investors and Dealers while distorting key data that is relied upon across the economy.

International regulators are waking up to the problem and have started to target car Manufacturers which report exaggerated and false sales figures. Last week it was reported that the U.S. Securities and Exchange Commission (SEC) opened an investigation into BMW, while in September Fiat Chrysler agreed to pay the SEC $40 million over claims it inflated sales figures.

“The practice of reporting false new car sales figures has been highlighted recently in the United States and it is a practice that has been endemic in Australia for some time,” said AADA CEO James Voortman.

“It potentially leaves consumers vulnerable regarding the start time of their warranty; it misleads investors by overstating the health of the Australian automotive industry; and it puts the squeeze on Dealers who are currently experiencing some of the most challenging market conditions in decades,” said Mr Voortman.

“It is high time that ASIC follows the lead of regulators in the United States, and comes down hard on those Manufacturers which push fake sales numbers and in doing so artificially inflate their reported market share,” he said.

Mr Voortman welcomed moves by Australian car Manufacturers to improve their sales reporting practices and commends FCAI on its work to continually improve the integrity of the VFACTs data, but has called on the industry to take swift action or risk the regulator forcing compliance through harsh financial penalties.

“Requiring a vehicle to be registered before it is sold is an important step, but it is only a first step and the whole industry should be working together to ensure that cars are only reported as sold when a genuine customer takes delivery of the car,” he said.

“It’s an open secret in the industry that a number of major Manufacturers set incredibly aggressive sales targets placing immense pressure on their Dealers to achieve these targets by reporting cars as sold, despite there being no end customer,” said Mr Voortman.

“Dealers are compelled to comply with Manufacturer directives as they fear being denied important incentive payments or even worse losing their franchise agreement. Many Dealers have been left with a backlog of unsold stock which is difficult to clear in a profitable manner,” he said.

“These practices also undermine the credibility of new car sales numbers reported through the VFACTs product, which is used by investors, economists and the Government in assessing the health of the industry and the broader economy and then making key decisions off the back of that information,” he said.

“In recent years some Manufacturers in Australia have focused solely on sales volumes which has led to questionable reporting practices and severely constrained the profitability of Dealers. Today we see the twenty-first consecutive month in which new car sales have contracted – surely now is the time to bring the focus back to profitability to ensure a sustainable future for the industry,” said Mr Voortman.

How does fudging automotive sales data impact you?

It can leave consumers vulnerable regarding the start time of their warranty.
Purchasing a new vehicle is the second largest investment a household makes (after buying a home) and is therefore a key indicator of consumer confidence and Australia’s economic health.
By falsely inflating data that is relied upon by Governments, institutions and investors, it can influence important decisions related to the economy such as interest rates that impact all households.

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New Car Dealers Question Automotive Add-On Insurance Proposals

The peak body representing Australia’s franchised new car Dealers has expressed concern over ASIC’s proposed intervention in the automotive add-on insurance market.

ASIC’s proposed intervention comes as the Treasury is leading work on the establishment of whole of economy reforms to the sale of add-on insurance.

“We don’t believe the automotive industry should be singled out for special attention, given that Treasury has recently put forward sweeping proposals for all add-on insurance products,” said AADA CEO James Voortman.

“ASIC’s proposals for the automotive industry go over and above what the Treasury are proposing, by limiting the opportunity for an informed consumer waiver and introducing additional procedures into the sales process,” said Mr Voortman.

“We understand ASIC’s concerns about consumer detriment, but as they note in their paper, this is largely a result of poor product design rather than the sales channel through which such products are sold,” he said.

“ASIC’s scrutiny of these products in recent years has had the desired effect, leading to a capping of commissions and resulting in many insurers withdrawing from the market,” 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.

The AADA has lodged its submission to ASIC and is looking forward to raising its concerns directly with ASIC through the consultation process going forward.

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Franchised Car Dealers Welcome Options to Reform Franchising

The peak body representing Australia’s franchised new car Dealers has welcomed the Government’s release of a draft Regulation Impact Statement (RIS) to address Australia’s franchising system.

“There is a clear imbalance in power between new car Dealers and the global Manufacturers to which they are franchised,” said AADA CEO James Voortman.

“The release of today’s RIS is another important step in achieving greater fairness in the relations between franchisees and franchisors,” he said.

“We are encouraged by a number of options put forward in this RIS, but none is more important than the proposal to introduce an obligation on the franchisor to ensure franchisees receive a return on significant capital expenditure,” he said.

“Franchised new car Dealers are required to invest large sums of capital in facilities and equipment, but all too often they are provided with shorter-term Dealer Agreements, making it almost impossible to recover one’s investment,” said Mr Voortman.

“The RIS has also provided options to limit the ability of franchisors to unilaterally vary agreements; expand the options for dispute resolution and clarify franchisees rights in terms of goodwill,” he said.

Achieving better protections for franchised new car Dealers in their relations with OEMs is the AADA’s highest priority. The AADA will be pursuing this goal through various government processes, including:

the establishment of automotive specific franchising regulations;
reform of the Franchising Code of Conduct;
class exemptions for franchisees to engage in collective bargaining;
reform to unfair contract terms;
reforms to the relations between suppliers and Manufacturers in relation to the Australian Consumer Law.

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New Car Dealers Make Largest Economic Contribution to Regional Electorates

New car Dealers turnover almost $60 billion worth of sales, they collect billions in government duties and charges and employ more than 58,000 people in electorates across Australia.

The Australian Automotive Dealer Association’s DealerNomics website has been updated to reflect the revised federal electoral boundaries and the newly elected members of the 46^th Parliament.

DealerNomics now also has more specific electorate information and for the first time it quantifies the number of apprentices employed and the community donations that Dealers make.

The AADA has also revealed Australia’s federal electorates in which new car Dealers make the largest economic contribution, with the top 10 made up exclusively of large, regional electorates.

South Australian seat of Barker tops the list with new car Dealers in the electorate employing almost 1,600 people with a total annual economic contribution of $333 million. In second place is Barker’s neighbouring seat of Grey while the rest of the top five is rounded out by the Victorian seat of Mallee, the Western Australian seat of Durack and Parkes in New South Wales.

“New car dealerships are present in just about every federal electorate, but there are more franchises in the electorates which are large by area, demonstrating the commitment of Dealers to service rural and regional communities,” AADA CEO James Voortman said.

“Dealers are crucial local businesses in country towns. They are often family businesses who employ locals and sponsor local footy teams or community groups,” said Mr Voortman.

“This interactive mapping tool demonstrates the significant reach of franchised new car Dealers throughout Australia as well as at the state and territory level,” he said.

“We will be encouraging our members to pay their local Member and/or Senator a visit and demonstrate to them through DealerNomics, the important contribution which car Dealers make in their electorate,” he said.

“Governments are in the process of considering a number of regulatory issues which will have a significant impact on the future of car retailing in Australia. It is important for decision makers to understand the scale and breadth of the industry before implementing any regulations,” he said.

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