News & Insights

The ACCC has released its draft report into the New Car Retailing Industry, and in doing so has revealed particular areas of focus for the regulator. The report identifies some key issues largely from the perspective of protecting consumers. While the focus is not just on dealers and manufacturers, there are still some useful takeaways for players in the industry.

The ACCC has indicated that they will take action to overcome the following issues:

1. The difficulty consumers face in enforcing consumer guarantees;
2. The limited information consumers have at the point of sale;
3. Consumer misunderstanding about their rights in relation to servicing and repairs; and
4. Access for technical information for independent repairers.

Enforcing consumer guarantees

The ACCC is concerned that when manufacturers deal with consumer complaints or enquiries about cars that have experienced a failure, they are predominantly referring to the manufacturer’s warranty or “goodwill” policies.

What should be happening, according to the ACCC, is that the manufacturers and their dealers also refer to the statutory consumer guarantees upon which the consumer is entitled to rely under the Australian Consumer Law.

The ACCC’s investigations have also uncovered that dealers and manufacturers have created a “culture of repair,” even where cars have known and systematic mechanical failures which would entitle a consumer to a replacement or refund under the consumer guarantees.

In response to this, the ACCC have emphasised that they will pursue manufacturers and dealers for breaches of the ACL where they provide alternative remedies in response to major failures. As an indication of how serious the ACCC treat this behaviour, the regulator recently commenced proceedings against Ford on 26 July 2017 for its misrepresentations to customers about the issues with their vehicles. Ford had allegedly told customers that the issues were caused by the way the driver had handled the vehicle, despite being aware of systematic issues over a significant period of time.

Limited customer information at point of sale

The ACCC has noted that consumers receive a high volume of complex information at the point of sale, and oral explanations (if given) are insufficient to adequately inform them of their rights. The ACCC has also expressed concern about the contents of car handbooks, including that the information about consumer guarantees is often limited.

In response to this, the ACCC has proposed to update and publish a new version of Motor vehicle sales & repairs – an industry guide to the Australian Consumer Law (August 2013). They have also proposed working closely with manufacturers and dealers to develop a concise and simple explanation of consumer guarantees.

Consumer misunderstanding about their consumer rights in relation to servicing and repairs

The ACCC reiterates in the report that consumers have a right to choose who carries out repairs and service on their cars under the manufacturer’s warranty, subject to the work being performed in accordance with the manufacturer’s standards.

The regulator has found, however, that consumers are choosing not to use independent repairers to repair and service their cars as they are the under the impression that this will void their rights under warranty.

The ACCC conducted their own study, reviewing logbooks and services manuals from nine manufacturers. The ACCC found a number of directly false statements, as well as statements that were at the very least misleading (eg “A Duly Authorised Dealer must carry out any service or repairs…”).

The key take-away from this is that the ACCC will be targeting misleading or deceptive conduct in relation to the use of independent repairers or non-OE spare parts.

Access for technical information for independent repairers

The ACCC has identified that independent repairers have continuing problems accessing technical information for new cars. Very few car manufacturers are providing equivalent access to the technical information provided to their authorised dealers and preferred repairer networks.

In response to this, the ACCC has proposed that a mandatory scheme be introduced for car manufacturers to share with independent repairers technical information, on commercially fair and reasonable terms. The specifics of this remain unclear. In any case, manufacturers are likely to have legitimate concerns about the sharing of security related-technical information to repair and service new cars.

Going forward

We note that the ACCC’s final report is due to be released late this year, with key stakeholder meetings to take place in late September. If you have any questions about the potential implications of the report, or have any general queries relating to your consumer obligations, we encourage you to get in touch with us.

This article was written by Patrick Smith, Lawyer – Commercial.