The Motor Trades Association says the Federal Government’s announcement to strengthen the Franchising Code of Conduct and extend Unfair Contract Terms and Unfair Trading Practices to all businesses regulated under the Code, is a game changer.
Now it includes businesses selling new motor vehicles, motorcycles, farm machinery and tractors as well as franchised motor vehicle repairers.
This is an important reform for the automotive industry as it means that any sector regulated by the Code will receive protections from unfair contract terms (UCT) without having to demonstrate that they come within the existing turnover and employee caps that apply to the UCT legislation.
Combined with existing Code provisions, such as the requirement to provide a reasonable return on any investment required by a franchisor, MTAA says this is a significant step forward.
It says Australian dealers selling motor vehicles, motorcycles, farm machinery and tractors as well as franchised motor vehicle repairers must be provided with a fair and level playing field when dealing with overseas-headquartered multinational companies.
The Government’s commitment, backed by $7.1 million in funding over two years for the Australian Competition and Consumer Commission (ACCC), ensures that this will lead to tangible enforcement actions. This funding will strengthen the ACCC’s ability to enforce the Franchising Code of Conduct, offering protection and support for local automotive businesses.
MTAA chief executive Matt Hobbs says the announcement acknowledges the unique challenges Australian automotive businesses face.
“Today’s announcement recognises that Australian automotive retailers need a balanced approach as they deal with large companies who are facing global headwinds and considering their operations here. This is a culmination of years of advocacy by MTAA, the State MTAs, and the VACC, and we are pleased to see the Government take decisive action to address these challenges,” Hobbs says.
MTAA has long called for bipartisan support for franchising reforms, highlighting that industry confidence is key to future investment.
“The industry seeks certainty so they can invest with confidence. These reforms must receive bipartisan support to ensure their successful implementation and help Australian businesses make long-term investments for the benefit of all Australians,” Hobbs says.
“These reforms are not just about fair practices within franchising but are also a broader effort to address power imbalances in the industry. With this backing from the Government, Australian automotive businesses can now face the global automotive industry with a stronger, more equitable foundation. This is a pivotal step forward for the automotive sector and the future of Australian businesses,” he says.
The MTAA also welcomes the Government’s announcement that it will bring forward the review of the New Vehicle Efficiency Standard (NVES) compliance point—shifting it from the point of import to when a vehicle is sold to a customer.
It says this change would ensure that car companies cannot push stock onto dealers to meet NVES compliance, thus placing the dealer in a position where they must shoulder financing costs until the vehicles are sold.
“Emissions should be counted when the vehicle is sold. By looking to count the impact of CO2 at the point of sale, the Government will remove the temptation for car companies to push vehicles onto dealers, no matter the demand of consumers, just to hit a compliance number for a particular year,” Hobbs says.
“These critical changes will assist Australian businesses to remain competitive and ensure they are not disadvantaged by unfair business practices while encouraging greater investment and a more sustainable automotive future,” he says.
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