The Australian Automotive Dealer Association is pushing back against manufacturer brands forcing their members to report unsold vehicle stock as sold.
Dealers have been under immense pressure to report an excess of holding yard stock, forced upon them by manufacturer, as sold when in fact they have no buyer, the association says.
AADA chief executive David Blackhall is calling out the practice which echoes sentiments from the Victorian Automobile Chamber of Commerce in September.
“Pressure to pre-report vehicles as sold, in order to meet manufacturer sales targets, can have serious consequences as Dealers are left with a backlog… which is difficult to clear in a profitable manner,” Blackhall explains.
The AADA has taken the issue directly to regulator the Australian Competition and Consumer Commission to put an end to the scheme which inflates sales figures but forces dealers to offload vehicles at unsustainable prices and can be a detriment to consumers.
“I have written to the ACCC Chairman, Rod Sims, and to the assistant treasurer, Stuart Robert, as well as the shadow assistant treasurer, Dr Andrew Leigh, to outline the industry’s concerns,” Blackhall warns.
“Pre-reporting can also adversely affect consumers as the warranty can commence from the date of the reported sale rather than the actual sale, leaving the car buyer with a reduced warranty period,” he reveals.
Dealers, Blackhall says, have little power against the problem without risking their business.
“Refusing to pre-report these vehicles is simply not an option for many dealers as they fear the manufacturer will withhold important incentive payments or even worse cancel their franchise agreement,” he explains.
The VACC and Victorian Automotive Dealer Association (VADA) have been campaigning against the misleading practice in recent weeks, with the former’s head of industry policy Michael McKenna saying in late August both organisations are combating the problem.
“Cars sold under this guise are anecdotally believed to amount to 10-15 per cent of new cars reported currently sold in Victoria and provide a set of data that is not reflective of the true state of the market,” he begins.
“VADA members advise that typically, the practice of ‘cyber cars’ involves them being offered incentives by the manufacturer at the end of the month to hit or exceed sales targets,” McKenna explains, “Quite often dealers are told to declare a certain amount of stock as sold or risk missing out on a bonus.”
“The practice quite often breaches dealer agreements with finance companies and could place some dealers in an invidious position, (where they) could or will lift the level of audit or reconciliation processes if this practice continues,” he says.
McKenna says the reporting of cyber cars distorts the market and is unfair to dealers doing the right thing.
“[It] creates a non-level playing field for dealers who do not participate, a dealer left with a car could create a credit risk in timing of payment,” he adds.
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