The Australian Automotive Dealer Association (AADA) has reiterated the need for strengthened automotive franchising laws following General Motors’ (GM) decision to pull out of the Australian market.

With Holden and more recently Honda reducing their presence in Australia, AADA chief executive officer James Voortman has warned of the risks and imbalances many Australian dealers are currently face at the hands of large multinational car companies.

“We have seen Holden terminate all of its dealers and Honda have cut a substantial portion too. If these multinationals need to withdraw or restructure their networks, so be it, but there must be a set of regulations that ensure they do so fairly,” said Voortman.

“It’s not just car companies pulling out of Australia who are a threat to local dealers but the unfair terms that many of them face in their commercial arrangements are an ongoing problem.

“This is not just an issue for the local dealers but also for Australian consumers and small businesses who rely on them.”

With many dealers already struggling following 25 consecutive months of declining car sales capped off by the outbreak of the COVID-19 pandemic, Voortman said AADA are pushing for increased protection for dealers through the new automotive franchising laws currently being drafted.

“That is why AADA has been working with the Government on draft automotive franchising laws due to be finalised in the coming weeks.

“It is crucial that these laws are strengthened so that Australian dealers are given protections similar to those afforded to dealers in countries like the US and the EU.”

Voortman has pointed to the behaviour of GM in making his case for strengthened measures, saying they have treated local dealers “very poorly” during the process of exiting the Australia market during the COVID-19 pandemic.

“The COVID-19 crisis has overshadowed the actions of a multinational Fortune 500 company virtually ending it’s more than 100-year association with Australia and treating local dealers very poorly in the process,” said Voortman.

“After announcing it was terminating 185 dealers across Australia, the compensation offered to them has been described as totally inadequate and not one has accepted the offer.

“Since the emergence of the COVID-19 crisis, GM have reportedly turned the screws and failed to budge on their initial compensation offer, telling dealers their ability to be a future authorised service dealer is dependent on them accepting the offer.”

AADA’s calls come after Senator James McGrath called out GM in the senate, stating he believed that local Australian dealers had been treated poorly by the American car manufacturer.

Source: Autotalk | Holden Dealer treatment shows regulations needed

20 May 2020