Better deal for car buyers

New-vehicle buyers will benefit from a new dealer franchising code introduced this week, but industry bodies argue more safeguards should be introduced.

The new vehicle franchising code of conduct introduced on Monday (June 1) is designed to even up the relationship between manufacturers and dealers, delivering the latter more power.

The code covers dealer agreements, capital expenditure and dispute resolution.

But industry bodies are urging areas such as warranty management be included in the code. There has also been a call for it to be expanded to the motorcycle and agricultural sectors.

The code has been delivered as dealers face a tough economic climate and brands withdraw from Australia. Infiniti announced its pull-out in 2019, Holden has been axed by parent General Motors and Honda wants to swap from a franchise to an agency-based network.

While the code is not explicitly designed to provide the public with a better buying experience, Australian Automobile Dealer Association (AADA) chief executive James Voortman was confident that would be an outcome.

“The public won’t notice any of these changes, but I strongly believe there are benefits for consumers,” he said.

“On the face of it dealer agreements are commercial arrangements between manufacturers and dealers, but customers are affected when a dealership is closed down with very short notice, or when a dealer is non-renewed and they have to sell their stock very quickly.”

Motor Trades Association of Australia (MTAA) CEO Richard Dudley told carsales.com.au the benefit for car buyers would vary from brand to brand because some manufacturers and dealers had stronger relationships than others.

“What this clarifies is there will be the ability to purchase knowing who they are purchasing from is part of a relationship that is built for the consumer’s requirements, whether that be the sale of the vehicle or ongoing care of the vehicle afterwards,” he said.

Discussions have already started with the federal industry department to expand the code to cover areas such as tenure and compensation.

But Voortman also raised the need to address the administration of warranties by manufacturers.

“If we could get better standards around that you would have a lot of customers seeing the benefits of not having to go back three, four, five times because of a faulty vehicle.

“I think a lot of that is borne out by the less than ideal practices that do occur behind the scenes when OEMs micro-manage warranty claims.”

The most obvious recent example of that is the Ford Powershift transmission debacle, which resulted in the Blue Oval brand being fined $10 million in 2018 by the Federal Court because its response to customer complaints was unconscionable.

Reflecting the MTAA’s remit, Dudley said motorcycle and farm machinery dealers should be covered by the code.

“MTAA understands that the almost identical concerns of our motorcycle and farm and industrial machinery retailers have been recognised and we have been assured these industries concerns will be addressed as part of an early review of these regulations,” he said.