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A focus on consumers, choice and competition in franchising code submission

The Federal Chamber of Automotive Industries (FCAI) has reiterated its call for Australian car buyers to be the focus for the Australian Government in any considerations to make further changes to automotive franchising.

The Chamber has made a submission to the Federal Department of Treasury in response to the release of a Government discussion paper into automotive franchising arrangements on 10 August 2021.

FCAI Chief Executive Tony Weber said the Government should not put the interests of one part of the automotive supply chain before those of its most important stakeholder – the Australian public.

“Australians have choice in how they buy clothes, electronics and even real estate and want the same choice when buying a new car. They also recognise that limiting these options destroys innovation and ultimately leads to higher prices,” Mr Weber said.

The FCAI’s evidence-based response to the automotive franchising discussion paper lodged today finds:

  • A stand-alone code is not needed and if introduced would lead to significant costs to industry and ultimately the consumer.

  • Changes made to the Code earlier this year in response to a large brand leaving the market and the early termination of dealer agreements have appropriately dealt with the consequences of this extraordinary event.

  • Further protections will limit the industry’s ability to evolve to meet changing consumer behaviours and expectations, further disadvantaging Australian car buyers.

  • Pre-contractual arbitration will not help the new vehicle industry nor the consumer and will only diminish the gains made by the recently introduced changes to the Code.

“To consider further changes, without observing the impact of amendments introduced only months ago is premature and clearly not driven by any evidence of market failure,” Mr Weber said.

“As with any new regulatory arrangement, understanding its impact compared to its intent is vital to good governance. This has to be done before any further changes can even be contemplated.

Mr Weber said retail innovation across the Australian economy is increasing every day.

“The consumer is gaining greater choice in how they purchase products and interact with the marketplace. We already see this in the used car sector. There should be no hinderance to providing this choice in the new car market.

“Despite this, the Government’s current direction will designate car dealers as a protected species, beyond the reach of change, and at the expense of the Australian motorist.” Mr Weber said.

“The Australian Government should not introduce any further regulation that will deny car buyers the choice in sales methods and competitive pricing they need and deserve.” Mr Weber added.

The submission is available on request.