News & Insights

Macpherson Kelley recently wrote an article about the likely impact and outcomes of the ACCC’s market study into Australia’s new car retailing industry. The ACCC has since concluded its 18 months of investigative research, and has just released its final report. This article provides a high level overview of the ACCC’s findings, and the likely effect of those findings on new car dealers.

Purpose

A key driver of the ACCC’s study was the concern that some car manufacturers are dodging their consumer guarantee obligations under the Australian Consumer Law (ACL) – Australia’s national consumer law.  The effect of this is that responsibility is being shifted back onto the car dealers, at the consumer’s expense.

Findings

The ACCC made three key findings in its report in relation to new car dealers. In summary, the ACCC found that:

1. commercial arrangements between manufacturers and dealers can negatively impact the way in which the dealer behaves in addressing consumer complaints and meeting its obligations under the ACL.
2. unnecessarily long and complex manufacturer policies can leave dealers inadequately reimbursed after remedying consumers under the ACL.
3. consumers often don’t understand the difference between consumer guarantees under the ACL and manufacturer warranties, sometimes because the dealers focus at the point of sale on the manufacturer warranty and the potential sale of an extended warranty.

Beyond the ACL, there were broader concerns expressed by Dealers about the imbalance in the relationship with manufacturers, through one sided Dealer Agreements.  Unfortunately, while the ACCC acknowledged these concerns, it felt they were better addressed in subsequent reviews of the Franchising Code of Conduct.

Recommendations

In relation to new car dealers, the ACCC recommended in its report that:

• car manufacturers transform their approaches to the handling of consumer guarantee claims under the ACL (or risk action for non-compliance by the ACCC);
• car manufacturers update their complaint handling systems to ensure that they are compliant with the ACL;
• car manufacturers review their dealer agreements, policies and procedures to ensure that they do not contain terms that are unfair to dealers;
• the ACL be enhanced to better clarify the entitlements under the consumer guarantees; and
• the ACL require specific forms of disclosure in relation to extended warranties.

Implications

It is clear that the ACCC recognises the need to crack down on manufacturers who try to avoid their statutory obligations under the ACL. If the recommendations in the Report are implemented, we may see less of this behaviour by manufacturers and more just outcomes for dealers and consumers alike in circumstances of faulty vehicles.

The ACCC have already commenced several actions against vehicle (and other) manufacturers.

Macpherson Kelley assists many car dealers with disputes against manufacturers in a range of circumstances, including those of arbitrary manufacturer policies, inadequate reimbursements by manufacturers, and manufacturers who don’t comply with their ACL obligations.

For further information about how you are complying with your obligations under the ACL and/or Franchising Code, contact Paul Kirton or Stefanie Orlando.