The Australian Automotive Dealer Association (AADA) has launched a review of how the Australian Consumer Law (ACL) is applied in the automotive sector, saying current settings expose franchised dealers to disproportionate risk and can ultimately disadvantage consumers.
The association, which represents more than 3,000 franchised new-car dealers, is calling for submissions from manufacturers, consumer groups and industry bodies as part of what it describes as a root-and-branch assessment of the ACL’s effectiveness in the automotive market.
AADA chief executive James Voortman says the arrival of new automotive brands in Australia makes it an appropriate time to reassess how the law is working.
“Quite rightly consumers purchasing motor vehicles hold the dealer and manufacturer(s) of those products and services to a very high standard,” Voortman says.
“However all too often it is the dealer, who played no role in manufacturing the vehicle, who carries the lion’s share of risk in meeting the ACL obligations, with flow-on effects on the consumer.”
Voortman says some manufacturers obstruct dealers’ statutory right to indemnification, worsening the power imbalance between global automakers and small local businesses.
“The vulnerable position of the dealer can often be used by some manufacturers to reduce their own risk by obstructing the dealers’ statutory right to indemnification. This practice by the manufacturer (who built the vehicle), is a key feature of the power imbalance found in our industry and has negative consequences for consumers,” he says.
Independent review led by Professor Jenny Buchan
As part of the initiative, the AADA has engaged Emeritus Professor Jenny Buchan to prepare an Issues Paper, due in the first quarter of 2026. Buchan specialises in power-imbalance issues between large and small businesses and will consult widely across government, industry and consumer organisations.
“Identifying and addressing power imbalances has been a key feature of my professional experience. To be able to bring my experience and author this Issues Paper, when the biggest transition to low-emission vehicles is happening right now in Australia, is something that I can see is very pertinent,” Buchan says.
The review will examine ACL provisions relevant to automotive retailing, identify barriers to effective indemnification processes, and consider international best practice where vehicle manufacturers have clearer obligations.
Review follows Govt push on stronger indemnification rules
The AADA says the timing is significant, given the Federal Government’s recent announcement to strengthen supplier-indemnification laws. It argues that any gaps or ambiguities in the ACL should be addressed before new civil penalties take effect.
The association says ensuring clarity around indemnification will benefit both consumers and dealers, particularly as Australia undergoes a major shift toward low-emission and electric vehicles.
Submissions and further information on the review are available at aada.asn.au/acl-review.
