Dealers squeezed by car manufacturers at consumers’ expense

19 September 2017

Car manufacturers need to step up to meet their consumer guarantee obligations under the Australian Consumer Law (ACL) and stop putting the squeeze on dealers through dealer agreements, policies and procedures, ACCC Chairman Rod Sims told the 2017 Australian Automotive Dealer Association National Dealer Convention in Sydney today.

As retailers, car dealers are the first point of call for consumers experiencing a problem with a faulty car, but information provided to the ACCC and released in the draft New car retailing industry market study showed an imbalance in the manufacturer-dealer relationship which imposes significant cost on dealers and ultimately affects consumers.

“The ACCC is concerned that some car manufacturers are shifting their consumer law obligations onto dealers. 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,” Mr Sims said.

“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.”

“Information provided to the ACCC indicates that there may be stringent requirements being set by some manufacturers to establish a remedy is warranted before approving reimbursement to the dealer. There may also be predetermined maximum amounts that dealers are permitted to spend on repairs without further approval by manufacturers,” Mr Sims said.   

“Many dealers believe that if they do not comply with these requirements, their franchise or dealer agreement will be put at risk. Consequently, dealers may be reluctant to offer remedies without certainty of being reimbursed, which may reduce consumers’ access to appropriate or timely remedies.”

Mr Sims reiterated that it remains the responsibility of dealers to meet their legal obligations to consumers under the ACL, and for manufacturers in turn to meet theirs by not adopting commercial arrangements that stifle consumer law rights. If they do, remedies are available to dealers.

“Where a dealer believes that dealer agreement provisions, policies, or procedures may breach the Franchising Code of Conduct, or the Competition and Consumer Act more generally, dealers can always report this to the ACCC for consideration,” Mr Sims said. 

A copy of  Mr Sims' speech to AADA is available at https://www.accc.gov.au/speech/advocacy-and-the-regulator.

Background

The ACCC commenced the New car retailing industry market study in June 2016 to examine issues related to:

  • access to repair and service information and data and post-sale service arrangements
  • consumer guarantees and warranties, and
  • fuel consumption, emissions and car performance.

The draft report was released in August 2017. The final report is scheduled for release by the end of 2017.

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