Consumer watchdog looks to beef up new car buyers’ rights

By Barry Park, 10 Aug 2017 Car News

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Consumer watchdog looks to beef up new car buyers’ rights

A draft ACCC report says new car buyers are being well looked after before they buy, but not so well after

AUSTRALIA’S consumer watchdog says it has put the car industry on notice after releasing a draft report looking into how new car buyers were being treated.

The industry study, released today after 12 months of investigation, suggests the Australian Competition and Consumer Commission will investigate whether it needs to beef up the level of protection given to new-car buyers.

Buying a new car is a significant purchase for a consumer,” the ACCC said. “The purchase of a car and its ongoing maintenance account for around five per cent of total average household expenditure annually, typically making it second only to housing expenditure in importance.

“Well-informed consumers and competitive new car retailing markets are therefore likely to deliver considerable benefits,” it said.

The study was launched after “a number of concerns raised with the ACCC and other fair trading agencies about how new car retail markets are operating” – namely defects with vehicles, misrepresentations to buyers, and issues in post-sale service markets.

The industry is big money: the ACCC said new car dealerships earned about $64 billion in revenue last financial year. This financial year, about 40,000 dealerships and independent servicing and repairs are expected to earn about $18 billion, it said, while almost 11,000 crash repair businesses were expected to earn $6.8 billion in revenue.

The Federal Chamber of Automotive Industries, which represents the interests of car brands in Australia, was contacted for comment. The ACCC has already taken Holden to court over the way it handled multiple failures in one of its vehicles, while Ford Australia will appear before the courts later this month over similar issues.

According to the consumer watchdog, there are big differences between the way that new-car buyers are able to enforce their rights before buying a car, and after.

“The biggest obstacle to consumers not receiving the remedies to which they are entitled under the ACL [Australian Consumer Law] is the failure of manufacturers’ complaints handling systems and policies across the new car industry to adequately take consumer guarantees into account,” it said.

As well, it will look at claims that the car maker’s restricted access to the information and data required to repair and service new cars is locking out independent servicing businesses.

The ACCC has also indicated it will ask questions about the way that fuel ratings and emissions are gauged for new cars, which generally fall well below the real-world numbers that new-car buyers experience.

The consumer watchdog has opened the draft report for public comment until September 7. It is due to hand down its final report later this year.