ACCC tips bucket on new-car retailing

The Australian Competition and Consumer Commission has issued a draft report for its study of new car retailing in Australia – and the findings are less than complimentary.

"Complaints to the ACCC about new car manufacturers have risen to more than 10,000 over the past two years. Our draft report highlights the urgent need to address widespread issues in the industry," says ACCC Chairman Rod Sims (pictured).

The ACCC's study follows recent court cases against Ford for dual-clutch transmission failures and against Volkswagen for its Dieselgate scandal.

According to the ACCC, the report has found three areas in which the automotive retailing industry has to lift its game. One is the way car companies and their respective dealer networks manage consumer complaints. This is often in conflict with Australian Consumer Law (ACL), the ACCC claims.

"The ACCC is deeply concerned about the level of non-compliance with the Australian Consumer Law in the new car industry. We will continue to take action to address failures by car manufacturers and retailers to provide the remedies to which consumers are entitled," Sims was quoted saying in a press release.

In the ACCC's view, ACL as it stands entitles vehicle owners to a replacement vehicle – like America's 'Lemon laws' – in the event of a 'major failure'. Refund or repair are other options, but the car companies will fight tooth and nail to avoid their obligations, citing warranty provisions, for instance, even though ACL guarantees consumer rights to repair, refund or replacement, including vehicles no longer covered by the new-car warranty.

Consumers are entitled under ACL to a repair for a minor failure or a full refund or replacement for a major failure. But there is a pervasive 'culture of repair' within the industry, the ACCC says, blocking the two other channels of redress (replacement or refund) when clearly the vehicle in question is a 'Monday or Friday' car. It means that a servicing dealer may continue applying band-aid fixes to a car that is bound to be problematical into the future – and long after the warranty has expired.

"The ACCC supports recommendations in the recent consumer law review to address uncertainties and strengthen the application of consumer guarantee rights. These proposed changes would entitle consumers to get a refund or replacement within a set period of time if their new car doesn't work. They would also clarify that multiple non-major failures can amount to a major failure and also require that there be clearer disclosure to consumers in relation to warranties," Sims explains.

"We will work with car manufacturers and dealers to develop easy guidelines which should be provided to consumers when they buy a new car so they are better informed."

Another tactic employed by the car industry is to demand vehicle owners sign a non-disclosure agreement (NDA), which holds them to confidentiality regarding redress for any claim against the car company and its servicing dealers. The ACCC also observes that there's no ombudsman or arbiter to hear complaints from vehicle owners, often forcing those owners to take car companies to court, either individually or in a class action.

Need for real-world testing
Fuel consumption and emissions are another cause for concern, with the ACCC declaring that the industry is not going as far as it should to ensure buyers are properly informed about the environmental aspects of vehicle ownership.

"Fuel consumption and emissions are often major purchasing factors for buyers when choosing their new car. We're concerned that what new car buyers are told their car will achieve is very different from practice," Sims says.

"Car manufacturers and dealers must ensure the representations to consumers about fuel consumption and emissions are accurate and appropriately qualified. We also support introducing more realistic laboratory tests and an on-road ‘real driving emissions' test to give people more accurate information before they buy."

Fuel consumption in the real world can be as much as 25 per cent lower than the figures provided by the car companies in accordance with ADR 81/02, says the ACCC, citing research by the Australian Automobile Association.

The third area in need of work is the sharing of technical information with third-party repairers – a long-standing issue of some concern to the Australian Automotive Aftermarket Association (AAAA), which represents companies such as Ultratune and Kmart Tyre and Auto Service. These repairers claim that they cannot service new cars properly if they don't have access to service data applying specifically to the vehicles brought in by owners.

"Car manufacturers should be required to share new cars' technical information with independent repairers. For new cars to be properly repaired and serviced, independent repairers need access to electronic information and data produced by car manufacturers," Sims says.

"This lack of competition hurts new car buyers who have fewer options to get the best deal for repairs and servicing, and restricts independent repairers from competing on a level playing field."

That's the flipside of another matter, dealerships and car companies discouraging owners from exercising their right to have a vehicle serviced by any aftermarket repairer that can provide a 'logbook' service. Owners are sometimes led to believe that having their car serviced outside the dealer network will void the warranty. The ACCC notes that sometimes this very belief is based around misleading text in logbooks and service manuals supplied for the car by the car companies.

Response from industry
In a brief statement, the Federal Chamber of Automotive Industries has replied to the ACCC's draft report, as follows:

"The Federal Chamber of Automotive Industries notes the release today (August 10) of the ACCC's extensive draft report into Australia's new car retailing industry.

"The industry strives to deliver the best outcomes for its customers through offering world-class technology, safety, value and service to Australian consumers; a commitment which is underpinned by both consumer law and the manufacturers' warranty and support mechanisms.

"The industry looks forward to working closely with the ACCC to provide more information about the complex matters raised in the draft report."

Also responding to the report was the Australian Automobile Association's Chief Executive, Michael Bradley.

"The AAA has long argued that consumers are not given accurate information on the real-world emissions and fuel use of cars they intend to buy," Bradley was quoted saying in a statement issued by the AAA.

"We have also highlighted the fact that competition in the vehicle repair sector will continue to be curtailed unless car manufacturers provide detailed vehicle service and repair information to independent repairers.

"The ACCC has today confirmed the issues the AAA and consumers have raised are real and in so doing, has put the Government on notice that action will be required.

"In the wake of today's ACCC report, the AAA renews its call on the Australian Government to introduce a real driving emissions testing program, conducted in Australia, using Australian fuels, to provide consumers accurate information.

"Real driving emissions testing is the best way to ensure Australians can buy a car that suits their budget."

Finally, Stuart Charity, the Executive Director of the Australian Automotive Aftermarket Association had this to offer:

"This is an interim report and there is still a great deal of work to be done to ensure that the ACCC recommendations are implemented. It is however a great sign that after a 12 month investigation, our independent competition watchdog has now verified what we have been saying for over 10 years.

"Our opponents have argued that consumers have choice, that car manufacturers already share all repair and service information, that the voluntary agreement signed in 2014 is working - yet all of these positions are not supported by the findings of the ACCC Draft Report issued today."

Interested parties can download the draft report from the ACCC's website and submit comments for inclusion in the final report, which is scheduled for release later this year.