Thursday, 14 September 2017 15:42

The Motor Trade Association of Australia has made a submission in response to the ACCC's interim report on the Market Study into New Car Retailing.

The Motor Trade Association of WA (MTA WA) made a significant contribution to this report and we thank members for their contribution.

Members are able to log in to download the full report; however the key observations and overview are detailed below.

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If members would like to discuss the submission further please contact your Division Manager on 9233 9800 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

Key Observations

  • The MTAA and Members: generally agree with the focus of the Interim Report on the areas of consumer guarantees and warranties; accessing technical information to service and repair new cars; parts supply; fuel consumption and emissions; and telematics ; generally supports suggested actions and recommendations designed to improve consumer awareness, understanding and education of consumer guarantees and manufacturer warranties; warmly welcomes the draft recommendation and actions that assures a mandated process for access to technical information.

  • MTAA believes the Interim Report has failed to adequately or satisfactorily ‘unpack’ the relationship between motor vehicle manufacturers and their distributors and retail dealers, and dealership agreements in particular, that underpin and influence many areas of investigation in the interim report.

  • MTAA is surprised and disappointed with the public and media commentary surrounding the release of the interim report. MTAA believes the commentary has been populist, political, and whether intentional or not, perpetuates misconceptions and misnomers about an automotive industry sector that is integral to Australia’s reliance on motor vehicle transport.

  • MTAA rejects the ‘bundling’ of manufacturers / distributors with retail dealerships in terms of accountability and responsibility in the critical areas under investigation.

  • MTAA strongly rejects unsubstantiated claims in the interim Report that Original Equipment Manufacturers and Dealers are steering the automotive retail market.

  • MTAA believes the ACCC Market Study teams understanding of insurers and crash repairers relationships, business models, and supply chain particulars are flawed and do not reflect real industry conditions and the detriment to consumers.

Overview

  • While welcoming the interim report in general and in particular certain recommendations and actions relating to mandated access to repair information, and improving consumer awareness and understanding of the ACL and consumer guarantees; MTAA respectfully suggests significant work remains to be done before the market study is finalised.

  • Some of the current proposed actions and recommendations could have unforeseen and potentially detrimental impacts on various sectors of the automotive industry, consumers and the broader economy. As an example, the simple application of consumer guarantee recommendations from the ACL review, and endorsed in the Interim report, may actually create larger issues than those they are attempting to resolve.

  • The market study investigations have by necessity unpackaged the highly complex and multifaceted matter that is access to technical information. The market study team is to be congratulated on the depth of their investigation and suggested actions and recommendations. While it will not please all stakeholders, the interim report provides excellent visibility on this important issue that is growing more complex daily.

  • Of particular note is the recognition within the interim report that the matter is more than just access on fair and reasonable commercial terms, but what is done with it, and by whom, and how consumers must be protected and security assured through proper training, equipage and scrutiny of those accessing it. Also noted is that any solution must not disadvantage any particular sector.

  • Unfortunately the resources and time available to investigate this critically important matter, appears to have had a negative impact on other important themes the market study into new car retailing should be canvassing.

  • MTAA is of the opinion that the relationships between manufacturers and retail new car dealers, and in particular dealership agreements, have not been satisfactorily investigated and this reduces the completeness of the interim report’s understanding of the industry.

  • Of even greater concern to the MTAA is that insufficient exploration of the manufacturer / distributor / dealer relationship and underlying agreements, appears to have given way to perpetuating urban myths that dealers are an extension of the manufacturer / distributor in some sections of the report and commentary surrounding it.

  • This is particularly disappointing as MTAA made the point in its original November 2016 submission that new car retailing did not deserve the negative reputation, perception or the imputation it endures. MTAA went further and stated ‘More often than not the new car retailing industry and its dealer participants are the ‘scapegoats’ or the ‘meat in the sandwich’ for problems and issues created by other sector industries and supply chain participants who obfuscate their own obligations and relationships to, and with, consumers.’

  • The MTAA is concerned with the pejorative commentary surrounding the release of what is only an interim report, and use of selective ‘findings’ of the report, which unjustifiably attacks new car dealerships. To smear an entire industry sector without adequate evidence and to use selective, and in some cases MTAA would argue misleading or incomplete information, detracts from the value of the investigations and study.

  • A case in point is the selective use of gross profit margins for one element (service) of a dealership business model. There was no explanation of the costs and requirements. There was clear avoidance of other readily available data on actual dealership net profit. There is ignorance of significant difficulties and exposure to behaviours and pressures dealerships endure from powerful market players. There was no balance or comparison with the gross or net profits of independent repair companies.

  • The MTAA requests clarification on the apparent contradiction between the reports emphasis on what it perceives to be a diminishing of consumer warranties and guarantees, while at the same time attempting to undermine the necessity for the use of genuine parts and trained staff in maintaining and repairing vehicles.

  • MTAA believes there is scope for a comprehensive mandated and prescribed Automotive Code of Conduct to provide the mechanism for an access to technical information process and to cover the relationship of dealerships and manufacturers /distributors. If this were to occur then dealership agreements would be removed from the Franchising Code coverage.

  • MTAA has taken the liberty of starting to draft a mandated code of conduct to capture the findings and recommendations in regard to access to technical information and also produce a version which attempts to include matters pertaining to the manufacturer / dealer relationship. The intent is for these documents to be used as a thought provoker or even the base for the development of outcomes.

  • The final report should build on some very good work in some sections and restore some balance and address unhelpful and unwarranted references and commentary in others.

  • The outcomes of government consideration of the final report of the market study into new car retailing has the potential to either influence the long term sustainability of all participants to the benefit of consumers; or lay the foundations for accelerated industry upheaval resulting from the rapid exit of many brands, the closure of many businesses, associated increase in job losses, and significant negative impact on the economy.

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