ADELAIDE, AAP – The federal government is seeking the views of Australia’s family-owned automotive businesses and their employees as it seeks to further tackle the power imbalance between small operators and multi-national car companies.
The government on Tuesday released a discussion paper on potential reform to the franchise sector including the merits of a stand-alone automotive code of conduct.
The paper also seeks options for expanding protections for new vehicle dealerships to other parts of the automotive sector.
Small and Family Business Minister Stuart Robert said after introducing changes in July the government was now seeking feedback to understand the extent of other potential issues in the sector and the need for further reform to produce a level playing field for automotive dealers and manufacturers.
“The government is delivering reforms to help ensure a fair go for dealers that employ more than 60,000 Australians, including 4000 apprentices, and contribute more than $12 billion to the economy,” the minister said.
The discussion paper also seeks views on options for mandatory binding arbitration as a way to resolve disputes, something recommended by a recent Senate inquiry.
Australian Automotive Dealer Association chief executive James Voortman said the paper marked another significant step in reforming the imbalances that existed between dealers and some vehicle producers.
“We believe this provides an opportunity for our industry to come together and build on the progress that has been made towards a fair and reasonable set of rules that govern relations between dealers and manufacturers,” he said.
But the Federal Chamber of Automotive Industries, which represents car makers, said regulatory reforms had come at the expense of consumers.
“Automotive franchising is a consumer issue, not an industry protection issue,” FCAI chief executive Tony Weber said.
“It should focus on providing consumer choice not dealer protection at the expense of all others.
“Regulation should encourage innovation and flexibility for business, not leave it anchored in the last century.”
The government’s discussion paper comes after changes were introduced last month to ensure franchising agreements between dealers and manufacturers specified how compensation for dealers is to be determined if the manufacturer withdraws from the market or changes its distribution model.
The question of adequate compensation was a key issue for a number of Holden dealers after General Motors decided to close the brand in Australia in early 2020 and also when Honda recently changed its distribution arrangements.
Mr Voortman said the consideration of options for compulsory binding arbitration was important given the experience of Holden dealers who found themselves in dispute with GM.
“The prospect of a drawn out and costly legal battle resulted in most Holden dealers accepting inadequate compensation packages,” he said.