The Australian Competition and Consumer Commission (ACCC) might have conducted a year-long investigation into the new car retailing industry, covering issues such as Australian Consumer Law, the ‘Right to Repair’, and the accuracy of fuel consumption and emissions reports, but the consumer watchdog did not hate the industry, ACCC chairman, Rod Sims, assured Australia’s retail automotive Dealers on Tuesday.
Speaking to a packed breakfast audience of more than 350 delegates at the 2017 AADA National Dealer Convention, Mr Sims – himself the son of a car Dealer – said the ACCC had conducted its new car retailing industry market study in response to a growing number of complaints it had received in relation to motor vehicles.
“Many of the motor manufacturers appear at the top of our most complained-about companies,” he said.
“We’ve had over 10,000 contacts in relation to motor vehicles over the last couple of years ; that’s an enormous number, with a range of issues involved.”
Mr Sims said that from its last 12 months looking into the industry, the ACCC had come up with three main observations:
- Manufacturers were preventing consumers from accessing the remedies they were entitled to under Australian Consumer Law
- The ACCC would recommend that it be mandatory for car manufacturers to share technical information with independent repairers
- Buyers of new cars needed much more accurate information about fuel consumption and emissions.
“Dealers may find it very challenging to simultaneously meet their obligations under Australian Consumer Law and maintain their long-term commercial relationships with the manufacturers,” he empathised.
“You are in a difficult position. We understand you operate in a very competitive market; few industries I think have as much choice about what product to buy.”
Mr Sims said he recognised the ‘constrictive’ relationship most Dealers had with manufacturers, limiting what they were able to do, and understood that they operated on slim margins from new car sales, making most of their money from aftermarket sales, finance, service, repairs and replacement parts.
“We have had a lot of submissions that have prompted us to further investigate the commercial relationship between manufacturers and Dealers,” he said.
However, he noted that it was the considerably greater proportion of profit to revenue in the service department as opposed to sales that the ACCC was concerned about. That ratio was behind the ACCC’s rationale that service and repair information should be shared with independents, in order to increase competition.
Mr Sims explained to Dealers how their responsibilities under Australian Consumer Law differed to their responsibility to make warranted repairs.
“Talking about consumer guarantees, of course if consumers have a problem with a new car they’ve bought, you’re their first, and usually their last point of contact. It’s extremely important that you’re aware that consumer complaints need to be resolved not just in accordance with warranties but also Australian Consumer Law,” he said.
“It may be that consumers are entitled to remedies under the warranty, but they might still be entitled to a remedy under Australian Consumer Law. So, as retailers, Dealers have actually more direct responsibility than manufacturers. However, equally, a Dealer is entitled under Australian Consumer Law to then seek reimbursement for those remedies from the manufacturer, where it’s the manufacturer that is responsible for the failure, which of course is often the case.”
Mr Sims gave the example of a car being brought back for repair “six-seven-eight times to get the same problem fixed. That’s a good example where acting in accordance with the warranty, you keep trying to fix the car. If you’re acting in accordance with Australian Consumer Law, you might well get to the point where a refund or a replacement vehicle is what the consumer is entitled to.”
At a meeting of federal and state consumer ministers at the end of August, a suggestion was made to amend Australian Consumer Law to specify that if a good (in this case, a car) doesn’t work within a specified period of time, consumers would be entitled to a refund or replacement without having to prove major failure.
“Multiple, non-major failures can amount to a major failure. If you keep taking a car back for repair and it keeps not being successfully repaired, that amounts to a major failure,” Mr Sims said.
The correct approach should be one of common sense.
“If you were the reasonable consumer and it was your car, and you’d known that the new car would experience the problem or problems it had, would you have bought it?” he asked.
He said that the Holden Consumer Guarantee Agreement was an example of this common sense approach. Holden had undertaken that if a new Holden vehicle experienced problems that caused the car to become immobile and no longer driveable within 60 days of its purchase, consumers would automatically be entitled to a refund or a replacement vehicle, without having to demonstrate a major failure.