AADA welcomes senate inquiry into dealer rights

Australia’s peak body representing new car dealers has welcomed a Senate committee call this week for an inquiry into the relationship between dealers and multinational vehicle manufacturers.

Australian Automotive Dealer Association chief executive James Voortman said many dealers were anxious about the future of the industry and hoped an inquiry would pave the way for reforms to protect their interests in the same way the US and EU protects dealers against big car companies.

The call was made by members of the Senate Education and Employment Committee, which is investigating General Motors’ Holden operations in Australia.

It is due to report on November 12.

GM announced it would end the Holden brand in Australia in February, before spending months in tense negotiations with the dealer network.

Meanwhile, Honda and Mercedes-Benz have announced plans to change to an agency dealer model. Mr Voortman said GM’s treatment of Holden dealers had sent shockwaves through the industry.

“We have since seen a range of other manufacturers follow GM’s example and start including unfair and one-sided terms in dealer agreements,” he said.

“There is plainly a massive power imbalance between Australian dealers and the multinational car manufacturers.

“Dealers take on the majority of the risk and are compelled to invest very large sums of capital in facilities, personnel, stock and equipment, but are offered very little in the way of protection if a manufacturer decides to terminate a dealer, leave the country or completely change its distribution model.”

Mr Voortman said GM had set a worrying “benchmark” for other vehicle manufacturers considering changes to their dealer network.

“All dealers are asking for is a greater degree of fairness, which recognises the capital and the decades of service they and their employees have put into building a brand,” he said.