TUESDAY, 4 SEPTEMBER 2018
SUBJECT: Labor’s plans to level the playing field between multinational manufacturers and Australian car retailers.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning everyone. My name's Andrew Leigh, the Shadow Minister for Competition. Thank you for coming along today. Today at the Australian Automotive Dealer’s Association conference, Labor made an important announcement. We announced that under a Shorten Labor Government, we would implement an industry-specific code governing the relationship between automotive dealers and car manufacturers. We haven’t taken this step lightly. But when the competition watchdog brought down a report on new car retailing, it outlined significant areas of concern. The power imbalance between multinational manufacturers and Aussie car dealers, many of whom are small businesses and family owned firms, has gotten out of control. We've seen instances in which manufacturers have enforced dealership terms as short as a year, in which they haven't dealt appropriately with issues of recalls and haven't ensured that the Australian Consumer Law is adequately complied with. We need to make sure that our automotive dealers get a fair deal. That we ensure that they can operate as family businesses, as small businesses. Automotive dealing is one of the most competitive areas of the Australian economy. Many parts the Australian economy are heavily concentrated, but auto dealers aren't that. They are a diverse set of businesses, employing nearly 70,000 people across Australia. Australians bought around 1.2 million cars last year and we want to make sure that Australian motorists get a fair go, that their consumer rights are respected and that auto dealers are looked after. This policy is based on the evidence from the ACCC report and based on our engagement with the Australian Automotive Dealers Association. I’ll now ask David Blackhall from the AADA to say a few words.
DAVID BLACKHALL, AADA CEO: Thank you very much Andrew. It's a great day for automotive retail dealers in Australia, new car franchise dealers. We’ve worked closely with Andrew and his team in Canberra to craft a set of facts that were previously, prior to the ACCC study, somewhat buried I think in the day to day hubbub of getting on with life and selling motorcars. I know our members, Andrew, sincerely appreciate your statements this morning. We look forward to when you assume Government to getting on with the issue of redressing this imbalance in the power relationship. And as I've said repeatedly, we're not out to run the manufacturing businesses for them. We're out for a fair go, a fair deal - something that's fair and equitable for Australian entrepreneurs, family owned businesses. That we're getting on, selling cars and employing 70,000 Australians. Thank you, Andrew, very much.
LEIGH: Absolute pleasure.
REPORTER: David, are we talking about here - for example let's say Bec over here spends over $20 million on building a showroom and then the manufacturers from Europe are putting unfair pressure on her to sell vehicles?
BLACKHALL: It's worse than that. It's the $20 million never ever makes sense when you look at the business settings. So you take the business, you say it's $20 million investment - I don't know if that's the number, we're just plucking that out of thin air. I mean, you look at the available revenue that will flow through the market area that you can serve given your physical location and you look at the average return on sales. How many of every dollar that comes in the front door, how much it's my bottom line? And this will be a five year agreement typically but the payback period could be 10 years. So as a business person, cash to cash, I’m $20 million out of pocket on day one. And it takes me 10 years to pay it back but the manufacturers is only prepared to give me five year agreement. At the end of that five year period or before it, they can write to me and say for no reason whatsoever we have the right to terminate your franchise, see you later.
REPORTER: What does it mean for the person on the street who buys a motor car? Are they going to be able to see under this new arrangement, if it comes into play, what - cars will get cheaper? What's the situation for the retailer?
BLACKHALL: I think it means a better, more stable buying situation. So you're not going to have dealers there one minute and gone the next, which have happened with some franchises in the last 10 years in this country. Agreements as short as one year. On buying a car and this gentleman, this lady, and a year later, six months later, they're not in business anymore. So stable, more stable buying environment, better deal for consumers and I think the real key to that - something Andrew touched on this morning - the proper obligation to the Australian consumer law. Under consumer law, you've got certain rights. Behaviours of some manufacturers - and I want to emphasise not all of them, but some - behave in a way that's clearly illegal in terms of Australia's consumer law. So a better deal, it’s a better for consumers and a more stable buying environment, more competitive.
REPORTER: I suppose you’re talking about warranties and servicing costs?
BLACKHALL: Yes. Absolutely. You know you get your car serviced at a dealer, you expect to be serviced properly and the dealer does that job. But then the manufacturer quite often will come back and say ‘well there's a technicality with the way you filled out that order, we're not paying the claim’.
LEIGH: Dealers and manufacturers need to work together in solving these problems and what we're doing with this announcement is recognising the significant power imbalance. The manufacture of cars is much more concentrated industry than the sale of cars, so we need to make sure that power relationship, as in other franchising power relationships, we get the balance right and consumer interests are respected. Any other questions? Thank you.
Authorised by Noah Carroll, ALP, Canberra.