Car Manufacturers Squeeze Dealers At Consumers’ Expense

Car manufacturers need to stop falling short on their Australian Consumer Law (ACL) obligations and quit putting pressure on car dealers at the expense of Australian customers, Australia’s consumer watchdog has warned.

Car dealers screwed by manufacturers at consumers' expense

At the 2017 Australian Automotive Dealer Association convention in Sydney today, the Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims put out a warning to car manufacturers.

Information provided to the ACCC and released in last month’s draft report New car retailing industry market study shows that there is a problem with the manufacturer-dealer relationship which passes on significant costs to dealers and ultimately affects consumers.

“The ACCC believes that some car manufacturers have policies and procedures about how dealers respond to consumer guarantee or warranty claims which may limit a dealer’s ability to provide a car refund, replacement or repair to a consumer,” said Mr Sims.

“While consumers will generally make first contact with a dealer when seeking a car refund, replacement or repair, dealers are entitled to seek reimbursement for those remedies from the manufacturer where the manufacturer is responsible for the failure.”

According to the ACCC, some manufacturers are setting “stringent requirements” to see if a remedy is necessary before even approving a reimbursement to the dealer.

“Many dealers believe that if they do not comply with these requirements, their franchise or dealer agreement will be put at risk,” Sims told the conference.

“Consequently, dealers may be reluctant to offer remedies without certainty of being reimbursed, which may reduce consumers’ access to appropriate or timely remedies.”

If car dealers are concerned that dealer agreement provisions, procedures or policies may have breached the Franchising Code of Conduct or the Competition and Consumer Act, they can report this to the ACCC.

Other issues under examination by the ACCC in the new car retailing industry include:

  • Access to repair and service information and data and post-sale service arrangements.
  • Consumer guarantees and warranties.
  • Fuel consumption, emissions and car performance.

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