The Australian Automotive Dealer Association (AADA) is calling on the Federal Government to exempt family-owned and small to medium-sized franchised new vehicle dealerships from Australia’s new mandatory merger notification regime.
The call follows the release of an independent report by BDO Australia, which found the new turnover thresholds could unintentionally capture dealership transactions despite posing little or no competition risk.
AADA chief executive James Voortman said the report confirmed the association’s longstanding concerns that franchised dealerships were never the intended target of the merger reforms.
“Unlike other industries, dealership competition is already heavily shaped by manufacturers through franchise agreements, dealer network planning and ownership limits,” he said.
Voortman said dealership acquisitions were typically driven by succession planning, owner retirement, rising compliance costs, shrinking margins and the need to achieve greater scale, rather than attempts to increase market power or reduce consumer choice.
The report identifies the Federal Government’s New Vehicle Efficiency Standard (NVES), increasing compliance obligations and growing capital investment requirements as key factors driving consolidation across the automotive retail sector.
Voortman said the timing of the reforms added further pressure to dealers already navigating significant industry change.
“Dealers are investing heavily to meet manufacturer requirements, manage the transition to EVs and adapt to the impacts of the New Vehicle Efficiency Standard, all while facing rising costs and intense competition,” he said.
The AADA is urging Treasury to introduce either a specific exemption for franchised dealership transactions or a low-cost, expedited approval process that recognises the unique characteristics of the franchised automotive retail sector.
“Dealers are under pressure from the NVES, rising compliance costs, major facility investment requirements and shrinking margins,” Voortman said.
“When a dealer sells, it’s typically about succession, viability and business continuity, not market power.
“As part of the upcoming review of the merger laws, the Government should introduce an exemption for smaller franchised dealership transactions that pose no realistic competition concerns.
“The merger regime should not create another barrier to business succession, regional investment and dealership viability.”
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