ACCC puts the foot down against car manufacturers

This article focuses on the likely impact and outcomes of the ACCC’s review of the new car retailing industry study and what it means for Dealers, who are often squeezed between the customer and the manufacturer, when it comes to warranty claims.

The ACCC’s view is that some car manufacturers are dodging their consumer guarantee obligations under Australian Consumer Law (ACL), shifting the responsibility back onto car dealers, at the consumer’s expense.

Speaking at the 2017 Australian Automotive Dealer Association convention, ACCC Chairman Rod Sim put manufacturers on notice.  In particular, the ACCC considers:

  • some car manufacturers have stringent policies and procedures in place about how dealers respond to consumers guarantee or warranty claims, restricting dealer’s ability to issue consumers with a car refund, repair, or replacement
  • a dealer’s failure to comply with these policies and procedures is often driven by a fear of jeopardising their franchise and dealer agreements with the manufacturer. Fearful of being left to foot the bill of a car refund, repair, or replacement without certainty over the manufacture’s reimbursement, dealers often delay and avoid compliance. However, this compliance comes at a cost to consumers, whose access to appropriate remedies is reduced
  • it is clear dealers are entitled under the ACL to seek indemnity reimbursement from the manufacturer of any remedies they have provided to the consumer, provided the manufacturer is responsible for the failure
  • any commercial arrangements (agreements or policies) which threaten these protections (to dealers or to consumers) must be avoided.

These clearly stated views will be very helpful when dealers need to convince a manufacturer to come to the party and reimburse the full cost of repairs, or to reimburse a full purchase price refund.

We often help our dealer clients with these types of disputes, and accept sometimes the line between major failure and minor failure is difficult to see.  Ultimately, it is the customer relationship that the dealer is trying to protect, which some manufacturers don’t seem to appreciate.

For example, we recently advised a dealer in a matter where its customer demanded a refund on a luxury vehicle after three steering failures in less than two years. The dealer sought a contribution from the manufacturer, but the manufacturer did not consider the vehicle’s loss of power to be a major failure. It wasn’t until VCAT proceedings were issued by the customer that the manufacturer was prepared to negotiate with the dealer and did contribute to a resolution with the customer.  The dealer was still out of pocket with costs.

On other occasions, we have assisted dealer councils in reviewing manufacturer’s warranty policies and helped them negotiate changes, by reference to the indemnity and other right under the ACL.

For further information or to run any current issues past us contact Paul Kirton or Stefanie Orlando.