New Car Retailing Industry market study

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In December 2017, the ACCC released its final report for the new car retailing industry market study. The ACCC has prepared a factsheet for authorised new car dealers.

Excerpt from the report

The ACCC has looked into competition and consumer
issues in the new car retailing industry.

We considered a number of issues which may affect
authorised new car dealers, including an analysis of
how manufacturers’ agreements with dealers and
related policies and procedures may impact on dealers’
compliance with the Australian Consumer Law (ACL).

We’re recommending that car manufacturers transform
their approach to consumer guarantee claims, update
their complaint handling systems, and review their
commercial arrangements with dealers to ensure they
comply with the ACL.

What we found

Commercial arrangements between manufacturers
and dealers can constrain and adversely influence the
behaviour of dealers in responding to complaints

Dealer agreements for the sale of motor vehicles are
deemed by the Franchising Code of Conduct to be
franchise agreements. As franchisees, dealers are
contractually obliged to comply with the terms, policies
and procedures set by the manufacturer (the franchisor).
Dealers are often under commercial pressure to comply
with these requirements so as to increase the prospects of
having their franchise agreement renewed.

Manufacturer complaint handling policies and procedures
normally determine a dealer’s response to consumer
guarantee or warranty claims. These policies usually
focus on the customer’s contractual rights under
the manufacturer’s warranty, and fail to adequately
consider consumer rights under the ACL. This can limit a
dealer’s willingness to address a consumer’s complaints
and potentially prevent dealers from meeting their
ACL obligations.