Media Releases Archive - Page 16 of 18

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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New Car Dealers Welcome Reforms To Automotive Franchising

The peak body representing franchised new car Dealers has welcomed the Morrison Government’s commitment today to make Australia’s new car retailing industry fairer for Dealers and consumers.

“We very much welcome the Government’s commitment to level the playing field between Australian new car Dealers and powerful offshore Manufacturers,” AADA CEO, James Voortman said.

“The existence of a power imbalance has been clearly demonstrated through various inquiries and reviews and today’s announcement that there will be reforms to automotive franchising arrangements is a significant step in the right direction,” said Mr Voortman.

“These reforms will address end-of-term and capital expenditure arrangements, which are key issues that have been raised regularly by our members. We will also be urging the Government to address issues of tenure and consumer law issues,” he said.

“The AADA will be working closely with Ministers Andrews and Cash, the Department of Industry, Innovation, and Science and other industry participants to make sure that the reforms are implemented,” he said.

“The AADA has worked tirelessly to develop broad support for industry-specific protections for franchised new car Dealers and the Minister’s announcement today represents significant progress,” he said.

“Reform in the Automotive retailing sector enjoys the support of the Government, the Opposition, the Small Business and Family Enterprise Ombudsman, the Franchising Council of Australia and most bodies in the Automotive sector,” he said.

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Dealers Welcome Parliamentary Road Safety Committee

The peak body representing Australia’s franchised new car Dealers has welcomed the establishment of Parliament’s Joint Select Committee on Road Safety.

“We support the establishment of this Road Safety Committee and look forward to contributing to its work and enquiries,” said AADA CEO James Voortman.

“New car Dealers play an important role in raising the level of road safety in Australia through the provision of newer, safer cars to Australia’s motoring public,” he said.

“Safer vehicles is one element of the Safe System approach and it is important that we strive to bring down the age of our vehicle fleet. Research released by the ABS this week shows that the average age of both passenger cars and light commercial vehicles has increased over the past five years,” said Mr Voortman.

“Our members also make passenger vehicles safer every day through servicing and maintenance work, and by fixing major problems through the vehicle recall campaigns, as we have been doing with Takata airbags,” he said.

“However, there is always more we can do to make Australia’s roads safer, and we look forward to meeting with the Committee members, appearing at its hearings and contributing to the work of the Committee in any way we can,” said Mr Voortman.

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Dealers Welcome Franchising Task Force but Automotive Code Should not be Slowed Down

The peak body representing Australia’s franchised new car Dealers welcomes the establishment of the Franchising Task Force, but has urged the Government to finalise the work already underway on specific protections for automotive Dealers.

“We appreciate the establishment of the Task Force and look forward to working with them. However, this should not come at the cost of progress already achieved by the Government in developing specific protections for franchised new car Dealers,” said AADA CEO David Blackhall.

“This work has support across the automotive industry, as well as from the Australian Small Business and Family Enterprise Ombudsman, the Franchising Council of Australia and both sides of politics; it is well advanced and should not be held up,” said Mr Blackhall.

“There is clearly a power imbalance between off shore car Manufacturers and their Australian Dealers. The industry is currently facing significant head winds and the formation of an automotive code or specific protections should be a priority for the Government,” said Mr Blackhall.

“There are currently Manufacturers who are experimenting with alternative distribution models that would allow them to still utilise Dealers but operate outside of the traditional Franchising model and the protections offered by associated legislation,” said Mr Blackhall.

“Dealers have made significant capital investments at the request of franchise partners. These businesses deserve to have their investments and employees protected,” said Mr Blackhall.

The Task Force was established to deliver the Government response to the recommendations of the Fairness in Franchising report, which was handed down earlier this year by the Parliamentary Joint Committee on Corporations and Financial Services.

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EOFY – Time is Right to Buy a New Car

The peak body representing franchised new car Dealers is urging consumers to take advantage of some excellent new car deals currently available as the financial year draws to a close.

“There are some fantastic deals available in showrooms throughout Australia and buyers should use the last two weekends of the financial year to secure a bargain buy,” AADA CEO David Blackhall said.

“Now is an excellent time to purchase a new car. Dealers are eager to clear stock to meet year-end targets and consumers stand to benefit from the recent interest rate cut,” he said.

“Many of Australia’s most popular vehicles are being significantly discounted and there are a range of other incentives for buyers, including very low interest rates, discounted servicing plans, no on-road costs, compimentary accessories and upgrades,” he said.

“If you are thinking of buying a new car before 1 July, do your reseach. Go online and make use of the wealth of available information comparing all the specials on the various makes and models,” said Mr Blackhall.

“Consumers should also visit their local Dealer, talk to the sales staff and request a test drive. Modern new vehicles are safe and environmentally friendly. They come equipped with remarkable specifications ranging from autonomous driving features to state of the art infotainment and it is important to experience this prior to buying,” he said.

“Its been a difficult period for the automotive retail industry with national new car sales contracting for 14-months straight. However, we are hopefull that the market will turn with the federal election out of the way and the Reserve Bank cutting the official cash rate by 25 basis points earlier this month,” he said.

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