URGENT Dealer Bulletin – ACCC Market Study Discussion Draft

Yesterday, we met with senior members of the ACCC team to be briefed on the key points contained in the first discussion draft on the above study ahead of its release today.

The draft may be reviewed in full here.

The accompanying ACCC media release entitled “Car Industry Put On Notice” may be reviewed here.

The discussion draft is 148 pages long, contains considerable detail and will require significant analysis. We have been asked to submit our response by September 7, 2017.

In the interim, we set out below the key matters raised in the discussion draft for your information:

1. Australian Consumer Law guarantees and warranties:

  • ACCC rejects the argument (mounted separately by AADA and FCAI) that consumer complaints of unresolved issues are a small percentage of the 1.1m annual vehicle sales
  • they assert that motor vehicles are regularly in the top ten complaint categories received by ACCC – far ahead of white goods and household electronics according to their internal statistics
  • this leads ACCC to the view that ‘systemic’ issues exist across the industry
  • ACCC accepts that dealers often receive inadequate support from OEMs in the resolution of consumer complaints but still considers dealers have an important role to play in reducing the level of consumer dissatisfaction
  • ACCC intends to publish guidance for consumers on their rights in the event there is a problem with their new car, including guidance for dealers to distribute to consumers at the point of sale
  • we were told that this may take the form of a one or two-page consumer disclosure document to be added to the deal file to provide evidence that dealer sales processes adequately explain ACL rights to customers.

2. Access to repair data

  • ACCC engaged an ‘independent expert’ to review cases provided by FCAI involving 9 different brands
  • in a majority of cases the expert was unable to resolve the repairs in a reasonable time due to lack of repair data, according to the draft report
  • ACCC has formed the view that excessive margins in the franchised channel are driving business behaviours by OEMs and dealers that are unacceptable and that have resulted in consumer detriment
  • the ACCC recommends regulatory intervention to mandate the sharing of technical information with independent repairers on ‘commercially’ fair and reasonable terms
  • this is likely to include wider access to parts
  • we will need to work through the detail to understand the framework proposed

3. Vehicle Labels

  • ACCC has formed the view that present label data are misleading and not useful to consumers
  • ACCC supports moves to enhance the quality of information supplied to consumers currently being considered by the Ministerial Forum into Vehicle Emissions, including the introduction of a more realistic laboratory test and real driving emissions testing.

AADA Initial Assessment

  • ACL Disclosures: The incremental administrative costs of the ACL disclosures in the F and I and Sales Offices may be minimal if the ACCC writes and mandates a simple disclosure document. However, this will need to be assessed as to its potential impact on consumer attitudes and predisposition to purchase both of the vehicle and any additional products such as warranties and the like.
  • Data Sharing and Parts Availability: The draft has implications for dealer revenue streams in the workshop and parts supply businesses. The potential impact is difficult to assess until the proposed rules are clearer.
  • Labelling Data: The vehicle labels are the responsibility of the manufacturers. The data used on them are the consequence of the application of a government-mandated testing procedures both for fuel consumption and emissions. It is difficult to see how dealers might play a role other than ensuring that accurate data from the labels are used in both the sales process and in any advertising.

Media

We have noted the comments from the ACCC Chairman Rod Sims and various commentators. Members will be concerned about many of these remarks. We will be making further comments after we have analysed the report in its entirety.

Response Timeline:

  • Draft made public – August 10
  • Submission deadline – September 7
  • Workshop – September 25
  • Final report – December 31

We were told that there will be extensive further consultations with individual groups.

Once we have reviewed that actual draft we will provide a further update, but in the meantime if you have questions, please call.

Kind Regards
SignatureDavid Blackhall
Chief Executive Officer
Australian Automotive Dealer Association Ltd
E: dblackhall@aada.asn.au
M: +61 413 007 833

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