Senate auto inquiry confirmed

A Senate inquiry into the relationship between car manufacturers and their dealers has been signed off and the terms of reference set.

First reported by carsales in September, this is an evolution and extension of an inquiry established after Holden was axed by General Motors in February.

The inquiry is being conducted by the Senate Education and Employment References Committee chaired by Labor’s Louise Pratt.

The committee became concerned about how the new-car sales business in Australia operated as it dug into the Holden closure and became aware of the acrimonious negotiations between GM and its dealers over compensation.

It was also made aware of the controversial creation of GM Specialty Vehicles to replace Holden.

The move by Honda and Mercedes-Benz to an agency sales model has also been brought to the attention of the committee.

The federal government has moved to try and address the balance of power in relations between manufacturers and dealers with a voluntary code of conduct, but Senator Pratt said it wasn’t enough.

“That is why this committee voted today to call all car manufacturers such as Honda, Mercedes, Volvo and Nissan as well as GMSV and all their respective dealer representatives to explain to this committee if a voluntary principles-based code can work,” she said.

“Labor understands that during this recession everyone is doing it tough. That is why it is crucial to have regulations in place that are enforceable and protect vulnerable businesses such as found in the US market.”

Submissions to the committee are open until October 30 and public hearings will occur in November. Senior management of a variety of car companies are expected to be called.

The reporting deadline for the inquiry is December 10.

The terms of reference for the inquiry into the regulation of car manufacturers and car dealerships in Australia, include:

1. Practices employed by manufacturers in their commercial relations with dealers, with specific focus:
- Investment required and tenure provided
- Termination and compensation practices
- Performance requirements
- Behaviour around warranty claims/Australian Consumer Law
- Unfair terms in contracts
- Goodwill and data ownership
2. Existing legislative, regulatory and self-regulatory arrangements
3. Current and proposed government policy
4. Dispute resolution systems and penalties for breaches of the Franchising code
5. Current and proposed business models in selling vehicles
6. Legislative, regulatory and self-regulatory arrangements found in international markets
7. The imposition of restraints of trade on car dealers from car manufacturers
8. Any related matter