Australia’s leading auto industry bodies are celebrating a win for franchised repairers and motor dealers in their inclusion under government reforms to the franchising code.
The federal government has decided it will extend Unfair Contract Terms and Unfair Trading Practices to all businesses regulated under the Franchising Code of Conduct.
This includes businesses selling new motor vehicles, motorcycles, farm machinery and tractors as well as franchised motor vehicle repairers.
The Government will fund $7.1 million over two years for the Australian Competition and Consumer Commission (ACCC) to ensure enforcement and will strengthen the ACCC’s ability to enforce the Franchising Code of Conduct, offering protection and support for local automotive businesses.
Advocacy win
The MTAA and the state-based MTAs have been lobbying at length for the changes to ensure the automotive sector is covered by the protections from unfair contract terms without having to demonstrate that they come within the existing turnover and employee caps that apply to the UCT legislation.
Combined with existing Code provisions, such as the requirement to provide a reasonable return on any investment required by a franchisor, this is a significant step forward, the MTAA says.
Balanced approach
Motor Trades Association of Australia (MTAA) CEO Matt Hobbs, welcomed the announcement, emphasising that it acknowledges the unique challenges Australian automotive businesses face.
“Today’s announcement recognises that Australian automotive retailers need a balanced approach as they deal with large companies who are facing global headwinds and considering their Australian operations. This is a culmination of years of advocacy by MTAA, the State MTAs, and the VACC, and we are pleased to see the Government take decisive action to address these challenges,” Hobbs says.
MTAA has long called for bipartisan support for franchising reforms, highlighting that industry confidence is key to future investment.
“The industry seeks certainty so they can invest with confidence. It is important that these reforms receive bipartisan support to ensure their successful implementation and help Australian businesses make long-term investments for the benefit of all Australians,” said Mr Hobbs.
“These reforms are not just about fair practices within franchising but are also a broader effort to address power imbalances in the industry. With this backing from the Government, Australian automotive businesses can now face the global automotive industry with a stronger, more equitable foundation. This is a pivotal step forward for the automotive sector and the future of Australian businesses,” he says
Pivotal step
MTA NSW CEO Stavros Yallouridis hailed the announcement as a pivotal step forward for the automotive sector, reinforcing the importance of fair business practices and industry sustainability.
“This is a major win for Australian automotive dealers and repairers, who have long faced unfair power imbalances in their dealings with multinational corporations. MTA NSW, alongside our state MTA counterparts and the VACC, have been at the forefront of this advocacy for years, and we are pleased to see our efforts result in meaningful reform.,” said Mr Yallouridis.
He says the ACCC funding will ensure proper enforcement of the new protections, providing businesses with confidence that the reforms will deliver real change.
“The government’s commitment to enforcing these changes with significant funding for the ACCC is crucial to ensuring real accountability and fairness in our industry,” said Mr. Yallouridis.
NVES changes
The Government’s will also bring forward the review of the New Vehicle Efficiency Standard (NVES) compliance point—shifting it from the point of import to when a vehicle is sold to a customer—another change supported by MTAA.
This change would ensure that car companies cannot push stock onto dealers to meet NVES compliance, thus placing the dealer in a position where they must shoulder financing costs until the vehicles are sold, Hobbs says.
“Emissions should be counted when the vehicle is sold. By looking to count the impact of CO2 at the point of sale, the Government will remove the temptation for car companies to push vehicles onto dealers, no matter the demand of consumers, just to hit a compliance number for a particular year.”
“These critical changes will assist Australian businesses to remain competitive and ensure they are not disadvantaged by unfair business practices, while encouraging greater investment and a more sustainable automotive future.”
Backing for the reform
The MTA NSW agrees this will take the pressure off dealers.
“The decision to count emissions at the point of sale rather than importation is another significant win for dealers,” Yallouridis says “This ensures they are not left burdened with excess inventory and financing costs due to regulatory loopholes being exploited by manufacturers. These reforms, alongside the strengthened Franchising Code, are a crucial step toward safeguarding the future of Australian automotive businesses.”
With the global transformation of the automotive landscape, it is vital that Australian dealers selling motor vehicles, motorcycles, farm machinery and tractors as well as franchised motor vehicle repairers are provided with a fair and level playing field when dealing with large, overseas-headquartered multinational companies.