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ACCC Calling For Reforms In New Car Retail Industry

The ACCC has released its final report after its market study into the new car retailing industry making three key observations after 18 months of extensive research, investigations and consultation with industry and consumer groups.

The three observations are; car manufacturers need to update their complaint handling systems and improve their approach to the handling of consumer guarantee claims; a mandatory scheme should be introduced for car manufacturers to share technical information with independent repairers; and new car buyers need more accurate information about their cars’ fuel consumption and emissions.

Rod Sims, chairman at ACCC says, “The ACCC recommends several reforms to improve the new car retailing industry, which should lead to better outcomes for consumers. Some will require industry led change and others, we consider, require regulation.”

For commercial arrangements between manfacturers and dealers, The ACCC has reviewed a range of ‘dealer agreements’, which are commercial arrangements between car manufacturers and dealers. Information available to the ACCC indicates that dealers respond to consumer guarantee claims within the framework of the policies and procedures set by manufacturers.

Sims says, “If manufacturers’ policies and procedures don’t adequately recognise consumer guarantee rights, this can influence the behaviour of dealers in responding to complaints. We recommend that car manufacturers update their complaint handling systems to ensure consumer law is front and centre of relevant systems, policies and procedures. Conditions or obligations under the manufacturer’s warranty must not exclude or limit consumers’ rights.

“We are concerned that some manufacturers impose unnecessarily complex warranty claim processes, leaving dealers inadequately compensated for repairs or remedies provided to consumers. Dealers have direct responsibility to provide remedies to consumers but they also have a right under the Australian Consumer Law to recover the reasonable costs of providing these from the car manufacturers when the manufacturer is at fault. We will take action if a manufacturer prevents a dealer from fulfilling their legal obligations under consumer law.”

The market study found that independent repairers continue to have problems accessing technical information to repair and service new cars.

Sims says, “The ACCC recommends introducing a mandatory scheme requiring car manufacturers to share the technical information needed to repair and service new cars with independent repairers.”

Any mandatory scheme must be available on commercially ‘fair and reasonable terms’, and have safeguards that enable environmental, safety and security-related technical information to be shared with the independent sector.

For fuel consumption and emissions the ACCC recommends that the Federal Government introduce more realistic laboratory tests for fuel consumption and emissions, and an on-road ‘real driving emissions’ test to give new car buyers more accurate information.

Sims says, “Our research shows fuel consumption is the third most significant purchasing factor for consumers after price and model. We are concerned that new car buyers are not receiving accurate information about fuel consumption or emissions performance.

“The ACCC will now work to implement the study’s actions and recommendations, including taking enforcement action where we see potential breaches of the Australian Consumer Law.”

The final report can be read here.

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