Car manufacturers ‘squeezing dealers’ over consumer expense – ACCC

Australian car manufacturers have been warned they must meet their consumer guarantee obligations under the Australian Consumer Law (ACL) because they are squeezing dealers.

As retailers, car dealers are the first point of call for consumers experiencing a problem with a faulty car.

However, information provided to the Australian Competition and Consumer Commission (ACCC) and released in the draft New car retailing industry market study showed an imbalance in the manufacturer-dealer relationship, which imposes significant cost on dealers and ultimately affects consumers.

“The ACCC is concerned that some car manufacturers are shifting their consumer law obligations onto dealers,” ACCC chairman Rod Sims told the 2017 Australian Automotive Dealer Association National Dealer Convention in Sydney.

“While consumers will generally make first contact with a dealer when seeking a car refund, replacement or repair, dealers are entitled to seek reimbursement for those remedies from the manufacturer where the manufacturer is responsible for the failure.

“The ACCC believes that some car manufacturers have policies and procedures about how dealers respond to consumer guarantee or warranty claims which may limit a dealer’s ability to provide a car refund, replacement or repair to a consumer.”

Information provided to the ACCC indicates that there may be stringent requirements being set by some manufacturers to establish a remedy is warranted before approving reimbursement to the dealer.

There may also be predetermined maximum amounts that dealers are permitted to spend on repairs without further approval by manufacturers.

“Many dealers believe that if they do not comply with these requirements, their franchise or dealer agreement will be put at risk,” Sims continued.

“Consequently, dealers may be reluctant to offer remedies without certainty of being reimbursed, which may reduce consumers’ access to appropriate or timely remedies.”

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