Reforms to Australian automotive franchising praised by industry

Peak body for Australian car dealers hails new franchise reforms to stop a repeat of Holden situation

Holden and Mitsubishi dealership
Gallery4

Snapshot

  • Franchising reforms have been designed to benefit dealers
  • Car dealers now in a better position to protect investment if manufacturers disappear
  • Reforms come in the wake of 2020 Holden departure

New reforms to the Australian Franchising Code of Conduct have put car dealers in a stronger position to protect their businesses, according to the Australian Automotive Dealer Association.

The revised regulations will take effect from July 1, 2021 and are aimed at protecting dealers with their investments if a manufacturer decides to leave the local market, such as in the case of Holden's departure from Australia.

Archive Whichcar 2020 11 05 1 Holden Signs Removal TR 3
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Holden's departure affected nearly 200 dealers Australia-wide

AADA CEO, James Voortman, said the reforms to the FCC will be positive for dealers in the future who have to face uncertainty when manufacturers leave Australia.

“These reforms are all about fairness and Australian dealers will now be in a better position when a car manufacturer leaves the country, reduces its network or changes its business model,” said Mr Voortman.

"We also look forward to working with the Government on the upcoming consultations on dispute resolution and the merits of a separate automotive code,” he said.

Archive Whichcar 2021 02 03 136388 Holden Signs Removal TR 28
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WhichCar was there in November 2020 when Gateway Holden removed the Lion and Stone from the dealership

Reforms to the current regulations were first floated when General Motors pulled Holden from the Australian market in February 2020, leaving dealers with next to no support.

Though an offer to over 184 Holden dealers of $1500-per-car was accepted by 120 franchises, the Australian Holden Dealer Council and AADA believed it was inadequate compensation to those who had been loyal to the iconic brand.

“These changes come after a difficult 18 months for Australian dealers which saw Detroit-based General Motors terminate every Holden Dealer without adequate compensation.

"It is clear that other manufacturers are considering making changes to dealer networks which is why these reforms are so important. These changes will bring a degree of balance to the relationships between new car dealers and the manufacturers to which they are franchised.

Archive Whichcar 2020 11 05 1 Holden Signs Removal TR 9
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Signage from former Holden dealers will likely be worth more one day than the $1500-per-car compensation they were offered from GM

"The reforms are sensible and fair and will bring all manufacturers up to the standard already being employed by ethically-minded car brands operating in Australia. Dealers in regional towns and cities all across the country will be welcoming these reforms.

"Automotive dealerships are important local businesses which employ Australians, invest in Australia and pay their taxes in Australia. Dealers look forward to healthy commercial relationships with their manufacturers, so we can continue to bring many benefits to Australian consumers and communities."

 

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