Dealer Bulletin: AADA’s Response to VACC’s Press Release

7 September 2017

DEALER BULLETIN

Following the issue of a recent VACC press release, several dealers have contacted AADA expressing their concern about the sentiment and accuracy of the statements made in it.

In particular dealers have taken issue with statements in the release claiming:

  1. A benefit to small businesses if the ACCC recommendations to mandate the sharing of service and repair information are introduced
  2. That the ACCC recommendations will create a “fair and balanced” automotive repair and service marketplace
  3. The ACCC report is a “good outcome” and is “not intended to divide the automotive industry but to bring it together”.

The following is a more detailed discussion of the issues raised and of the dealer concerns, dealt with in numerical order:

  1. Many dealers, especially in rural and regional areas, consider themselves small businesses and they can see no benefit to them or their businesses in the ACCC recommendations. These small business dealers tell us that the local independent repairers with whom they compete, typically outnumber them and some members have as many as five or six tin shed repairers surrounding their dealership. Even though collectively these independent repairers might only employ ten to twelve people, they are still able to attract a considerable amount of customers and their ongoing survival and success is testament to their ability compete and provide choice to consumers.
  2. While dealers acknowledge that competition in the market creates benefits for consumers, they also point out that for competition to be fair, those competing must be on a level playing field. Dealers are disappointed by the VACC press release, as it fails to acknowledge or make mention of the stringent requirements placed on them by the dealer agreements they operate under. As all dealers know, these agreements call for staff, including those in the service department, to undertake ongoing training. In addition, dealers are required to hold prescribed levels of spare parts and purchase special tools and other repair equipment. Taken as a whole, with the inclusion of facility requirements and other performance criteria like minimum CSI scores, the dealer agreement places huge capital investment demands on dealers, none of which independent repairers are exposed to. Dealers are concerned that those without a clear understanding of the industry will not appreciate that independent repairers, who may employ unqualified staff in a tin shed, do not bare overheads comparable to those of a dealer. It is unfortunate that the VACC press release does nothing to dispel these concerns. Granting independent repairers access to tools, equipment and repair information, with none of the expenses that a dealer must incur, would create an inequity in the market and effectively give them an unfair advantage, tipping the scales too far in their favor.
  3. Dealers have voiced their incredulity at the naivety of these statements, questioning how anything that gives independent repairers an unfair advantage, while providing no appreciable benefit to the value proposition offered to consumers, could do anything other than drive a wedge between dealers and their larger (by repair market share) independent competition. It is difficult to understand how this is a “good thing” for anyone except independent repairers.

Dealers should be aware that AADA does not subscribe to or agree with the points of view contained in the VACC press release. In its response to the ACCC New Car Retailing Market Study, AADA will be submitting a comprehensive paper that deals with all of the issues, particularly those around ensuring an equitable market remains and dealers are not unfairly treated. Franchised new car dealers compete openly with their surrounding independent repairers, and other dealers, to provide consumers with an exceptionally high level of service and choice. Contrary to the views of the VACC, AADA does not regard the ACCC intervention as being necessary, fair or likely to produce better outcomes for the industry or consumers.

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