Australian automotive businesses need franchising reform NOW

Public news

The announcement last week that General Motors will retire from sales in Australia and New Zealand by 2021 is yet another cruel blow to Holden Dealers across the country.

While GM confirmed that local design and engineering operations, as well as Maven and Holden Financial Services operations will wind down in Australia, it is ultimately local Holden dealers and their hard working staff that will bear the brunt of this withdrawal. Between South Australia and the Northern Territory, there are approximately 20 Holden Dealers, each employing up to 40 staff on average.

It will be important that dealers are compensated for the investments they have made in capital, time and effort over many decades of service. General Motors has announced that Holden will honour all warranties and servicing offers made at the time of sale in addition to recall and safety related issues for at least the next decade.

As a decision that was made on the other side of the world in Detroit, this situation highlights the vulnerable position that vehicle dealers are put under in Australia by global automotive manufacturers who hold all the power. Countries such as the United States of America do have strong automotive franchising laws and manufacturers are taking advantage of Australia’s relaxed approach to franchising regulations.

We need franchising reform now!

Automotive dealers in Australia take on all the risk when they open a franchise, investing millions of dollars in facilities, product, equipment and staff at the behest of manufacturers.

While much of the attention of the GM announcement rightly highlights the pain that new vehicle dealers and their staff are suffering, we believe that the scope of current franchising reform needs to go further and broadened to cover the wide range of automotive industry franchise agreements such as motorcycle, heavy vehicle and farm machinery dealers, and even some repairers.

The Federal Department of Industry, Science, Energy and Resources released Automotive franchising draft regulations for consultation this month. We have been working closely with members to provide input in the lead up to this point in regards to franchising reforms and it is our view that the Federal Government needs to act swiftly to implement the proposed draft regulations that will introduce changes for the automotive sector under the Franchising Code of Conduct.

The MTA’s CEO, Paul Unerkov, along with other state-based MTA CEO’s, will be meeting with Federal Minister for Industry, Science and Technology, Hon. Karen Andrews MP and Senator and Minister for Employment, Skills, Small and Family Business, Michaelia Cash, this week to discuss the Holden situation and the need to make progress on automotive franchising reforms to protect vulnerable businesses.

If you would like to give feedback in regards to the Federal Government’s franchising draft regulations, click here to contact Industry and Government Engagement Manager, Kaes Cillessen.

You can access the exposure draft regulations and associated documentation from the Federal Government by clicking here. It is important that you provide your feedback to us by February 28 so that it can be included in the MTAA’s submission.