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OFFICIAL PUBLICATION OF AADA
MARCH 2019 | ISSUE 26
2020 +
BEYOND
AT AADA
CONVENTION
INTERNATIONAL GUESTS LEAD CONVENTION LINE-UP
FRANCHISE ENQUIRY SLAMS CODE
BANKING ROYAL COMMISSION - CONSEQUENCES FOR
THE AUTOMOTIVE INDUSTRY
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WELCOME Australian Automotive Dealer Association
CONTENTS ISSUE 26 | MARCH 2019
FEATURE: AADA 2019 NATIONAL DEALER CONVENTION & EXPO
2020 + Beyond At AADA Convention........................................................................5
CONTACT AADA
Office 6, Level 4, 150 Albert Road NADA Legal Counsel To Headline AADA................................................................6
South Melbourne, VIC 3205
UK’s Leading Trainer Heads Convention Sales Event...........................................7
CONTACT AUTOMOTIVE DEALER
936B Glenhuntly Rd, Expo Open Day Event A New Bonus........................................................................8
Caulfield South, VIC 3162
Issue No. 26 | MARCH 2019 POLICY
PUBLISHER: AADA
Blackhall To Consult As Transition Plan Takes Shape.........................................9
MANAGING EDITOR: Luke Prendergast
AADA To Work With Government On Point Of Sale Exemption......................... 10
PRODUCTION MANAGER: Stace Agombar
CREATIVE DIRECTOR: Charles Bayer Dealers Welcome Increased Protections Outlined In Report Of Franchising Inquiry.. 11
ART DIRECTOR: Nick Murphy Dealers Support EV Revolution............................................................................. 12
ADVERTISING MANAGER: Geoff Vine
geoff@automotivedealer.com.au Banking Royal Commission - Consequences For The Automotive Industry... 13
Mobile: 0413 854 779
AADA Gathers Franchise Code Intel At NADA.................................................... 15
Phone (03) 9576 9944 | Fax (03) 9576 7277
AUTOMOTIVE DEALER
Unfair Contract Terms And Warranty Audits – Limitations And Opportunities.. 16
DELIVERY/CHANGE OF ADDRESS
(03) 9576 9944 or FEATURE: 2019 AADA NADA STUDY TOUR
editor@automotivedealer.com.au
EDITORIAL
Tour Delegates Get Social At NADA San Francisco........................................... 18
editor@automotivedealer.com.au
FEATURES
EDITORIAL & ADVERTISING OFFICE
936B Glenhuntly Rd,
Caulfield South, VIC 3162
ATO Crackdown On Dual Cab Utes....................................................................... 23
Buffett Invests In SA Auto Insurance.................................................................... 24
No responsibility is accepted by the publisher Sales Consultants Can Do Better: JD Power Survey.......................................... 25
for the accuracy of information contained
in advertisements in the Automotive Dealer
magazine. Publication of any advertisement does
Be A Leader In Developing Leaders..................................................................... 27
not constitute endorsement by the publisher
of any product, nor warrant its suitability. Why Independent Dealers Need An Automotive CRM....................................... 32
Advertisements are published as submitted by
advertisers.
Auto Industry’s Takata Website Leads To 1 Million Airbag Replacements...... 34
COPYRIGHT
No part of this magazine may be reproduced
without the publisher’s written permission.
More Than 87,000 New Vehicle Sales In February............................................. 35
CONTRIBUTORS
The views expressed in Automotive Dealer by
Why You Must Text Your Customers.................................................................... 36
external contributors and advertisers are not
necessarily those of AADA. Harley Goes Electric.............................................................................................. 37
AUSTRALIAN
AUTOMOTIVE DEALER
MOTORSPORT
@AADA_ASN
ASSOCIATION
Supercars 2019 Season Opens With Plenty Of Changes.................................... 29
WE’D LIKE TO HEAR FROM YOU.
We’d like to hear from you about what’s been schools, supporting junior sporting clubs or It’s a pity that the community work being
happening at your dealership that you think sponsoring a charity event. done by Dealers is a well-kept secret. We
could be worth passing on to our readers. intend to change that. AADA is determined
We would like to know. to generate a greater respect for new car
It can be anything from a unique sale, a fleet franchise Dealers as compassionate business
deal or a story about a member of your staff Whatever the story you have, it will be good people. Part of our strategy is to remind the
who recently accomplished a notable feat. reading. Send us the information and key media, politicians and opinion makers that,
contact details and we will follow it up. If you by employing over 66,000 people, AADA
It could be a ‘feel good’ community initiative have photographs of the endeavour so much members make a substantial contribution to
you have undertaken involving local the better. the Australian economy.
Is your data secure?
Your business relies on a range of system Data security is critical, so with each integration,
integrations with manufacturers, suppliers Auto-IT gives you the opportunity to see what’s
and service providers. Typically, your shared, and to whom. This ensures you have
Dealer Management System (DMS) supplier complete transparency over all third party
implements these in co-ordination with the integrations while helping you to comply with
relevant third parties on your behalf. legislation and retain the necessary control.
The question is, what integrations are in place It’s just another reason why we’re Australia’s
and exactly what data is being shared? most trusted DMS partner.
We make switching easy. Learn how.
Australia’s trusted DMS Partner auto-it.com | sales@auto-it.com
FEATURE: AADA 2019 NATIONAL DEALER CONVENTION & EXPO Australian Automotive Dealer Association
2020 + BEYOND AT AADA CONVENTION
T
he AADA National Dealer Convention or at least keeping pace with it. There are many The UK’s number one automotive sales
& Expo returns to Melbourne in 2019 questions facing the retail automotive industry trainer, Simon Bowkett, returns to feature at
with the theme ‘2020 + Beyond’. and the Convention will address them via a the AADA Convention Team Sales Event,
comprehensive and meticulously-planned while a new initiative is a free Expo Open
To be held at the Melbourne Convention and program. Day for middle managers, to more fully share
Exhibition Centre from September 9 to 11, the the knowledge, technology and associated
2019 Convention & Expo has been designed Questions such as: In the wake of the ASIC products developed to drive success in the
to help car retailers adapt and prepare for the inquiry into finance and insurance, what will modern automotive dealership.
future by addressing changes in the dynamics the new F&I department look like? How do
of the market. we continue to strengthen our relationships Four sessions comprising expert panels will
with the OEMs, with whom our futures are discuss and debate issues close to the heart of
inextricably linked? What will be the result of car retailers, including gender diversity and
the proposed franchise code? What do we do succession planning.
about diversity? Succession planning? Used
cars? ROI? No matter how far technology advances
business is still about people, and how we
AADA has put together a program of panel employ that most vital of resources is critical to
sessions, workshops and guest speakers our success. Training, reputation management,
designed to address these questions and more. service departments, used cars, data – all
involve people and how we deal with them –
Award-winning international journalist and Headlining the event is NADA’s Chief Legal and advocacy: the importance of our industry
chat show host, Anjali Rao, returns after Counsel, Andy Koblenz. The Executive having a clear vision and a cohesive approach.
she was extremely well-received at the 2018 Vice President Legal and Regulatory Affairs None of these crucial human resources are
Convention. The former Sky News and addressed the 2019 NADA Convention on the going to become any less significant. In fact,
CNN reporter and anchor charmed all and subject of Disruption in the Auto Industry, in a world of technology the human touch is
sundry with her eloquence, affability and and his thoughts on this challenge to our more valuable than ever. People skills: they’re
professionalism. existing paradigm of operations are sure to be the future, in 2020 + Beyond.
enlightening. His session should be on the list
Our industry is undergoing rapid change. As of any Dealer aiming to encounter the future We look forward to seeing as many Dealers as
Dealers we need to be in front of that change, with open eyes and mind. possible at the AADA 2019 National Dealer
Convention & Expo.
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FEATURE: AADA 2019 NATIONAL DEALER CONVENTION & EXPO Australian Automotive Dealer Association
NADA LEGAL COUNSEL TO HEADLINE AADA
D
isruption. It was the theme of models will supersede traditional car The potential savings from not owning a
the AADA 2018 National Dealer ownership. With research showing, however, car were estimated to be US$3,445 annually,
Convention and it was a subject that the average American family makes 10 which, with an average wait time of one
addressed in detail at the NADA 2019 car trips per day – and with an average wait hour per day, equated to US$9.44 per hour.
Convention in January. time of six minutes per ride sharing trip – Mr Considering 88.5 per cent of respondents
Koblenz argued that it was hard to see people earned more than US$9.44 per hour, the
NADA's Executive Vice- giving up their cars and waiting around for an survey concluded that the financial savings
President of Legal and hour per day in order to run their errands. were not worth the time expended in waiting
Regulatory Affairs, Andy for ride shares.
Koblenz, alongside Senior Nearly 90 per cent of Americans surveyed said
Vice-President of Public they had no plans to give up their personal The survey also examined attitudes to
Affairs, Jonathan Collegio, cars. Just 11 per cent said they would get rid of autonomous vehicles (AVs), with 56 per cent
presented research showing their car in favour of ride sharing. of respondents saying they would purchase an
that the disruptors still have a long way to go AV. Amongst millennials this figure was 71 per
before replacing the traditional model of car The under-35s, aka the ‘Millennial generation’, cent, while for the over-35s it was 49 per cent.
ownership. were slightly more prepared to give up their
personal vehicles, with 81 per cent of those Regarding the degree of autonomy, 80 per cent
Mr Koblenz will be a special guest at the surveyed indicating they would. However, the said they would prefer mostly autonomous
AADA 2019 National Dealer Convention & over-35s showed strong resistance, with 93 per cars with an 80 per cent safety increase, while
Expo in Melbourne from September 9 to 11. cent stating they would keep their personal car. 20 per cent said they preferred near-complete
He will speak to the subject of Disruption, safety with fully autonomous vehicles.
sharing his belief that the traditional model of An overwhelming 93 per cent of all respondents
automotive dealerships has a fair way to go yet said that a car provides freedom, while just Mr Koblenz will present the full findings of
before being replaced. seven per cent said car ownership was a hassle. the survey at the AADA 2019 National Dealer
Amongst millennials this split was 85-15, while Convention & Expo in September.
We have heard predictions over the past for the over-35s it was a massive 98-2 split.
few years that ride sharing and subscription
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FEATURE: AADA 2019 NATIONAL DEALER CONVENTION & EXPO Australian Automotive Dealer Association
UK’S LEADING TRAINER
HEADS CONVENTION SALES EVENT
T
he UK’s number one automotive sales product, and then supporting this with the deal. Simon believes the key to successful
trainer, Simon Bowkett, is the headline management is organisation and motivation
name featuring in AADA’s Team Sales The skills – good and bad – your new of yourself and others. His study of theories
Event at the AADA 2019 National Dealer salespeople learn in the first 90 days on the job of human behaviour on top of his own life
Convention & Expo. last with them for the rest of their careers. Who experience has well equipped him to analyse
is teaching them those important skills that are what makes successful management and,
Simon returns for his third AADA Convention, either making or costing you sales? crucially, how to implement this and inspire
having previously spoken at the 2009 and 2014 others.
events. Who is Simon Bowkett?
Having moved from sales into sales This is a golden opportunity for your sales staff
In 2000, Simon founded Symco Training based to learn first-hand from one of the leading
on his belief that sales trainers were either management, and following a period of
successful senior management, Simon moved sales trainers in the world. The perspective and
unwilling or unable to show sales staff how to experience of someone who has risen to the
implement the solutions they proposed. Simon into training.
top in one of the world’s toughest markets can
believes in delivering not only inspiring and He saw in the market a gap for trainers who only benefit your people and send them home
insightful training but in demonstrating those could bring ‘the real world’ into training, and armed with the knowledge and confidence to
skills and techniques with real customers. in 2000 formed Symco Training to build a go to the next level in their careers.
In dealerships around the world the focus team of trainers and consultants who could
bring practical experience and proven success AADA is thrilled to have secured someone of
applied by many sales executives is to try Simon Bowkett’s calibre, and we look forward to
and sell a deal. Simon will tell you how to get to their training methods. “There’s no place for
customer-shy trainers in Symco”, he says. this event with keen anticipation.
your teams to focus on selling themselves, the
Innovative Workshop LUBRICANTS.
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FEATURE: AADA 2019 NATIONAL DEALER CONVENTION & EXPO Australian Automotive Dealer Association
EXPO OPEN DAY EVENT A NEW BONUS
A
nyone who has been to an AADA the retail automotive industry are sure to take The Expo is always the hub of activity at
Convention will appreciate what a plenty from this free opportunity to visit the any AADA Convention, with displays,
wealth of information they provide. 2019 Expo. demonstrations and explanations of new and
You can’t help but come away more informed, innovative products, services and technology,
with a greater understanding of the issues This is ideal for middle managers to come and specifically designed to improve the operations
facing our industry and the many potential see exactly how much innovation is happening and bottom line of dealerships and their
solutions to those challenges. in our industry, familiarise themselves with various departments. Be sure to register to take
new products and technology, and acquaint advantage of this fantastic opportunity.
We know Dealers would love to send all themselves with those people and companies
their staff because there is so much to learn; providing new and improved services.
however, we understand that is not always HOW TO REGISTER
cost-effective. It is a great way for those who might otherwise
not get the chance to attend an AADA
So now, in an exciting new initiative, AADA Convention to gain an understanding of what The Expo Open Day is a free event,
is introducing a free Expo Open Day to more goes on, and absorb some of the knowledge but attendees are required to
fully share the knowledge, technology and that is shared so generously. They will have register. To do so, visit the website:
products developed to drive success in the the opportunity to rub shoulders with leaders aadaconvention.com.au
modern automotive dealership. of our industry and take home real, practical
Date: Monday 9 September 2019
solutions and a greater understanding of the
Dealers, managers, staff, allied industry bigger picture of the retail automotive game. Time: 1.30pm – 7.30pm
professionals and anyone else associated with
8 | MARCH 2019 | automotivedealer.com.au
POLICY Australian Automotive Dealer Association
BLACKHALL TO
CONSULT AS
TRANSITION PLAN
TAKES SHAPE
A
ADA CEO, David Blackhall, will “We thank David for his leadership and look Blackhall’s CEO services contract ends 30 June
reduce his full-time commitments at forward to continuing close ties through to the 2019. He has indicated a desire to step down
the end of his current contract on 30 end of the year,” Mr Keating said. from his CEO role at that time and generally
June 2019. AADA is delighted that David reduce his full-time commitments.
will continue in a consultancy and advisory AADA has announced the following changes
capacity to the AADA for a further six to the organisation of the AADA Secretariat, At the Board’s request, David has agreed
months until 31 December 2019. effective immediately: to continue working with the Board in a
consulting and advisory capacity through the
Separately, AADA is announcing leadership • James Voortman, Executive Director end of 2019. He will be concentrating on the
transitional arrangements in accordance with a Communications and Policy, is being delivery of the Automotive Code.
plan approved last year by the AADA Board. appointed to the newly-created position
of Deputy CEO. James will continue The Secretariat changes are in line with a
AADA Chairman, Terry Keating, said David to report to the CEO, David Blackhall, leadership transition plan developed and
has been an outstanding CEO for AADA. until 30 June 2019. approved by the AADA Board last year. These
arrangements are aimed at allowing James
During his almost four-year tenure he has • Brian Savage, Executive Director and Brian to progressively assume their wider
guided the Association through a period Operations, is being appointed to duties during the next four months, under
of unprecedented regulatory and legislative the newly-created position of Chief David’s guidance and mentorship.
change. Whilst some of these regulatory Operating Officer. Brian will also
changes are still being negotiated, David has continue to report to the CEO for the The AADA Board will make an
agreed with the Board to continue to assist same period. announcement on the full-time replacement
us during 2019, through to fruition on these for David Blackhall as CEO as soon as
important matters. All other Secretariat positions and reporting possible. We expect to make further
relationships remain unaltered. David announcements about our Secretariat
organisation in early July 2019.
automotivedealer.com.au | MARCH 2019 | 9
POLICY Australian Automotive Dealer Association
AADA TO WORK WITH GOVERNMENT ON POINT
OF SALE EXEMPTION
A
ADA will work with the Federal
Government to ensure the
Government’s decision to abolish the
point of sale exemption for retail Dealers
providing car finance does not hurt the
industry.
The decision, based on a recommendation
in the Banking Royal Commission, caught
the new car industry by surprise when it was
announced in February.
Amongst 17 recommendations in the
report was that the Government remove the
exemption of retail Dealers from the operation
of the National Consumer Credit Protection Act
(NCCP Act). The Government accepted the
recommendation.
Larger dealer groups already hold credit
licences, but only a few dozen Dealers are
understood to hold credit licences.
In its response to the report, the Government
“Leadership in this area is with the finance providers of the finance and play no part in
said it recognised the impact the change would
providers and we look forward to working approving or rejecting finance applications.
have on many businesses.
with them to ensure that financiers, Dealers
and consumers are not disadvantaged during The Government also agreed to changes in the
It said it "will carefully consider how these
this transition.” sale of add-on insurance products by Dealers,
reforms are implemented to ensure balance is
including working towards a deferred sales
achieved between consumer protection and
Mr Blackhall said it was unclear why model and the imposition of a cap on the
access to products and services."
the exemption needed to go. Obtaining amount of commission paid to vehicle Dealers.
AADA CEO, David Blackhall, said the point of finance from a dealership is a cost-effective,
convenient solution for many consumers and “The concept of a deferred sales model is
sale exemption was only briefly mentioned in
the Royal Commission, by its own admission, already under consideration by ASIC. We
the Royal Commission’s interim report, so to
repeatedly said that delinquencies in the car will be urging Treasury to adopt a model that
find its abolition was now Government policy
finance market are very low. defers the sale for around three to four days
was a surprise.
and allows informed consumers a waiver,” Mr
“It is unclear what this policy will mean for One factor likely to help Dealers is that the Blackhall said.
the provision of finance at dealerships. It is exemption also applies to other National retail
chains and other stores that offer credit to “Allowing ASIC to impose a cap on add-on
not certain how many new car Dealers already
assist consumers with big-ticket items such as insurance commissions will only formalise a
have credit licences, but we do know that
white goods and furniture. practice already being employed by the main
many mid-to-small and regional dealerships
insurance companies.”
do not,” Mr Blackhall said.
As with Dealers, shop assistants can currently
offer loans or credit cards and help customers There will also be a review on commissions
“I appreciate the Government’s commitment
fill out the forms without holding a credit for general insurance and consumer credit
to carefully consider how this reform is
licence. insurance, to test whether the exemption to
implemented. The AADA will make ourselves
the ban on conflicted remuneration remains
available to work with the Government to
Dealers operate as vendor introducers who justified, which the AADA looks forward to
ascertain the impact this will have on Dealers
facilitate car finance and make it convenient participating in.
and to ensure the transition is as smooth as
for customers to obtain. Dealers are not the
possible.
10 | MARCH 2019 | automotivedealer.com.auPOLICY Australian Automotive Dealer Association
DEALERS WELCOME INCREASED PROTECTIONS
OUTLINED IN REPORT OF FRANCHISING INQUIRY
A
ADA has welcomed calls for increased In a damning report released on 14 March, The report suggests the government
protections for Dealers contained in the the federal parliamentary inquiry into the create a franchising task force, made up
report from the Parliamentary Inquiry $170 billion franchising sector called for a total of representatives from Treasury and the
into Franchising. overhaul of Australia’s franchising system. Department of Jobs and Small Business, to look
into its recommendations.
AADA CEO David Blackhall said the While both the Government and Opposition
association welcomed the recommendation for have committed to the establishment of an The Opposition has said it will support such
changes to the Franchising Code, to embody industry-specific Automotive Franchising a task force and act on its recommendations.
specific industry protections within schedules to Code, it can only help the cause of franchisees Small Business Minister Michaelia Cash said
the current Franchising Code. to have this kind of spotlight shone on the many the government would analyse the report and
issues and unfairnesses built into the current consider what improvements needed to be
“While the Report stopped short of system. With pressure now to be applied to the made.
recommending our preferred approach of a franchisor side of the relationship, this marks
standalone Automotive Code, we are prepared an opportunity for retail automotive Dealers to "The government is committed to supporting
to discuss with Government the Committee’s pursue more equitable rules and regulations to effective and fair reforms to the franchising
proposal for a core Franchising Code with ensure a fairer outcome. sector without imposing unnecessary regulation
greater powers, and schedules to the Code that on the sector," she said.
address specific industry considerations,” he The bipartisan report calls for new laws, greater
said. enforcement powers and penalties for the The report also calls for improvements
regulator, as well as a host of changes to the to disclosure and transparency, including
“We particularly welcome the prohibition on franchising code. provision of all financial information when
unilateral changes to the Terms and Conditions franchises are sold or transferred. This would
of Dealer Agreements, and the buyback The report states that the current franchise code include Business Activity Statements and
conditions for stock, parts and equipment has "manifestly failed to deter systemic poor increased clearness and culpability with regard
when a Dealership Agreement is terminated. conduct and exploitative behaviour and has to marketing funds.
The Government needs to include these entrenched the power imbalance". Its authors
proposals in their consideration of a standalone even went so far as to compare behaviour in It recommends the task force consider making
Automotive Code. the franchising sector with that revealed by the illegal the provision of unfair contract terms
banking royal commission. in franchise agreements, and explore the
“It is now very important for the Government possibility of a public franchise register, via
to respond to the Inquiry Report quickly. This "The extent of poor corporate governance in which franchisors would update disclosure
will maintain momentum and address the some areas of franchising is comparable to that documents and template franchise agreements
power imbalance between overseas vehicle in the financial services sector," it said. "There on a yearly basis.
Manufacturers and local new car Dealers, which are deeply rooted cultural problems that will
currently leaves Australian businesses and their not be resolved by a franchisor replacing a few The report calls for civil penalties if franchisors
many employees extremely vulnerable.” senior executives." fail to comply.
FRIDAY
IS GRAYS DAY
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https://www.graysonline.com/automotive-trucks-and-marine/motor-vehiclesmotor-cycles/motor-vehiclesPOLICY Australian Automotive Dealer Association
DEALERS SUPPORT EV REVOLUTION
A
ADA has welcomed the release of a
report by the Senate Select Committee
Inquiry into Electric Vehicles, but
disagrees with its suggestion that Australia’s
retail automotive Dealers were failing to
promote growth in EV sales.
The report was critical of a ‘policy vacuum’
that has so far kept the EV industry from
growing, warning that Australia would miss
out on the coming ‘transport revolution’.
“(Electric vehicle) uptake in Australia lags
behind that of other comparable countries
due to a relative absence of overarching policy
direction from Australian governments,” the
report said.
and will sell whatever vehicles our customers Other recommendations include a dedicated
AADA CEO, David Blackhall, said AADA want,” Mr Blackhall said. taskforce to develop the plan, a national target
supports the Senate Committee’s report to encourage the uptake of electric vehicles
“Unfortunately, the authors of this report have on Australian roads, more ‘coordination’ with
on electric vehicles but is disappointed by
quoted the Tesla Owners Club and ignored the operators to expand the existing charging
evidence suggesting Dealers are not promoting
evidence of Australia’s 1,500 franchised new network, and a national target for government
the sale of EVs.
car Dealers and the 70,000 people they employ. fleets.
“There are some important recommendations
“Electric vehicles are part of the future and There are currently 12,691 vehicles in the
in this report and new car Dealers are looking
Dealers are determined to be part of a thriving Commonwealth fleet, but only 12 are electric.
forward to playing our part in supplying EVs
industry which supplies them to the market –
to the Australian market,” he said.
the primary reason that they are not yet selling On costings obtained by independent senator,
“We are supportive of a public education well is related to supply, cost and range.” Tim Storer, it would cost an extra $5m by 2022
campaign and a coordinated approach to skills to start converting half the government fleet
Talking down the efforts of the tens of to electric by 2025, or an extra $2.7m to do the
and training. We are also supportive of a CO2
thousands of dealership employees across same by 2030.
standard and Australia should work towards
Australia will do nothing to accelerate the
an achievable standard that does not punish
uptake of EVs. Further recommendations coming out of the
local consumers and businesses.
report included the need for an aspirational
The senate committee warned that, should target for Australia’s road fleet, similar to New
“It is also encouraging that the Committee
governments fail to act, Australia will miss Zealand’s, and a Formula E championship race
has not recommended a relaxation of used car
out on the environmental, health, social and to encourage consumer interest.
imports as was suggested by certain groups. It
economic benefits of the growing industry
is, however, very disappointing that this report
New electric showroom opens in Sydney
has mentioned evidence claiming that car “Australia is on the cusp of the most
Dealers are not interested in promoting and significant disruption and transformation of As proof that Dealers are not biased against
selling electric vehicles. This assertion, which our transport system since the advent of the EVs, Col Crawford Hyundai’s showroom
was repeated by certain groups throughout the internal combustion engine,” the report said. officially opened at Brookvale in Sydney on
inquiry, is completely false.” February 15.
“Reductions in greenhouse gas emissions, cost
Mr Blackhall said that to resist selling EVs savings for vehicle owner-operators, increased The 50-year-old dealership claims to have “the
would reduce profits and put Dealers in job opportunities and economic growth, widest selection of electric and hybrid cars
breach of their franchising agreements with improved health outcomes and increased that have been presented by one dealership in
vehicle manufacturers, potentially risking their fuel security are just some of the benefits that Australia”. These are mainly from Hyundai,
businesses. Australia can realise as EV use begins to climb.” BMW and Renault.
“In our numerous representations to this The committee made 17 recommendations, The dealership has three EV chargers.
committee, we consistently made the point including calling for a national plan to manage
that new car Dealers are technology agnostic the rollout of electric cars.
12 | MARCH 2019 | automotivedealer.com.auPOLICY Australian Automotive Dealer Association
BANKING ROYAL COMMISSION -
CONSEQUENCES FOR THE AUTOMOTIVE
INDUSTRY
The Commissioner recommended abolition of other retailers having to be appointed as credit
Evan Stents the point of sale (POS) exemption relied upon representatives by credit providers and being
Lead Partner, by most car Dealers to be a loan intermediary recorded as such on an ASIC register. As credit
Automotive Industry without holding an Australian Credit Licence representatives, Dealers will need to provide
Group, HWL or being appointed as a credit representative their own credit guides and will also need
Ebsworth Lawyers of a licensee. The POS exemption has applied to be members of the Australian Financial
since the commencement of the National Complaints Authority (AFCA), thereby
O
n 4 February 2019, the Government Consumer Credit Protection Act and its opening up every aspect of their business to
released the final report of the Regulations. The exemption was included an external complaints process, unless AFCA
Royal Commission on the Banking, because, in the midst of the GFC, there were exercises a discretion otherwise.
Superannuation and Financial Services concerns that the burden of regulation in the
retail sector under the NCCP Act would have In the Report, the Commissioner does
Industry. In the Report, Commissioner not acknowledge that Dealers are already
Kenneth Hayne made 76 recommendations, a further stifling effect on an already slow
economy. From the outset the exemption was ‘representatives’ of Australian credit licence
a number of which will have significant holders, and as a result those credit licence
consequences for participants in the devised as an interim measure to be reviewed
within 12 months of its implementation. holders are already accountable for Dealers,
automotive industry. This article examines with a responsibility to ensure compliance with
three recommendations in the Report that are While some Dealers may obtain their own credit legislation, training and management of
of particular relevance to car Dealers. Australian credit licence to provide credit conflicts. Instead, the Commissioner has cited
1. Removing the ‘point-of-sale’ exemption of assistance, the abolition of the POS exemption the following observations made in the 2013
retail dealers from the NCCP Act would likely result in most car Dealers and Productivity Report into Competition in the
automotivedealer.com.au | MARCH 2019 | 13POLICY Australian Automotive Dealer Association
Australian Financial System, that under the customers add-on insurance products (such as contracts regulated by the Insurance Contracts
POS exemption: guaranteed asset protection (GAP) insurance Act.
and tyre and rim insurance).
• Retail Dealers are not subject to entry 3. Caps on commissions
or conduct standards and ASIC has no The Commissioner is essentially adopting
power to exclude from the market any ASIC’s proposal in ASIC Consultation Commissioner Hayne also recommended that
who engage in conduct that is dishonest Paper 294: The Sale of Add-on Insurance and caps on commissions should be introduced for
or incompetent Warranties through Caryard Intermediaries. add-on insurance products sold in connection
The Report states that one likely consequence with the sale of a motor vehicle, with the level
• Retail Dealers have no responsible of a change to a deferred sales model is that of the cap being determined from time to
lending obligations, and the premiums payable for policies subject time by an ASIC legislative instrument. This
to the model could not be financed by the recommendation was based on evidence
• Consumers may be unable to obtain given in the Commission’s sixth round of
loan made to purchase the vehicle without
remedies for their conduct. hearings, which showed that the levels of
specific adjustment of the loan arrangement.
In Commissioner Hayne’s view, however, commissions paid to motor vehicle Dealers in
In relation to the second and third points,
the potential inconvenience caused by this connection with the sale of add-on insurance
it is important to be aware that the relevant
outcome is justified in light of the benefits to products contributed to the misselling of those
lender has responsible lending obligations
the consumer of moving to a deferred sales products. ASIC stated, in its September 2016
in relation to each loan originated through
model. The inconvenience referred to may report on the sale of add-on insurance through
the retail Dealer and a multitude of remedies
include the need for a further unsuitability Dealers, that in the 2015 financial year the
may be available to consumers against the
assessment and physical amendments to commissions paid to Dealers for the sale of
financier (by virtue of the retail Dealer being
contract documents. add-on insurance products were as high as
its ‘representative’) and directly against the
79% of the premium. ASIC also observed that
retail Dealer under the Australian Consumer
Another factor not mentioned in the Report the amounts paid in commissions on these
Law and laws of general application.
is that some extended warranty products products exceeded the amounts paid out to
Nevertheless, Commissioner Hayne concluded in the market are not regulated as financial customers who made claims.
in the Report that he is strongly in favour of products, because they are sold by the Dealer
incidentally to the sale of the vehicle under In 2017, in response to the perceived problems
removing the POS exemption.
the ‘incidental product’ exemption in the created by the high commissions paid to
2. A deferred sales model for the sale of add- Corporations Act. These are currently outside Dealers, the ICA prepared a submission to
on insurance ASIC’s jurisdiction and it is unclear how a the Australian Competition and Consumer
deferred sales model would apply to them. If Commission proposing that insurers cap
Commissioner Hayne recommended that a they became subject to a deferred sales model, commissions at 20 per cent of the premium. It
Treasury-led working group should develop the deferral of their sale would likely prevent is possible that ASIC will follow the lead of the
and implement, as soon as reasonably them from benefiting from the incidental ICA and cap commissions at an amount of 20
practicable, an industry-wide deferred sales product exemption. per cent.
model for the sale of any add-on insurance
products (with the exception of policies of In addition to this recommendation, the This article was written by Evan Stents - Lead
comprehensive motor insurance). Under Report also recommends that hawking of Partner, and Christian Teese - Senior Associate,
such a model, insurers or their representatives insurance products should be prohibited and Automotive Industry Group | HWL Ebsworth
would be required to wait for a specified that unfair contract terms provisions now set Lawyers
period of time before attempting to sell to their out in the ASIC Act should apply to insurance
organiseit
Eliminate 90% of your documents.
Don’t file it. Digitise it. Call Mark: 0412 847 172 or 02 9262 7357 | mark@organiseit.com.auPOLICY Australian Automotive Dealer Association
AADA GATHERS FRANCHISE CODE INTEL AT
NADA
A
s we move towards adoption of the The consultations gave AADA important charge’ to retail warranty rates. Other states
Automotive Code of Conduct, AADA insights into how such codes work in other have added a recoupment ban clause to their
took the opportunity, during our Study markets, while UK and European Dealers were automotive franchise laws to prevent this.
Tour of the National Automobile Dealers interested in Australia’s potential code.
Association (NADA) Convention in January, California Dealers are confident the bill will
to pick the brains of our colleagues from the AADA CEO, David Blackhall, and officials pass again and be approved by new Governor,
US, the UK and Europe. held a series of highly productive meetings Gavin Newsom.
with NADA CEO, Peter Welsh, and his legal
Over the next few months AADA will consult director, Andy Koblenz. Other information AADA learned included
with both sides of politics to develop a Dealer- the knowledge that some US states have
specific Franchise Code, so we felt it pertinent They also met with senior leaders of the enacted 10-year moratoria preventing repeat
and responsible to arm ourselves with the California New Car Dealers Association demands for capital expenditure on dealership
best information from our friends overseas (CNCDA), Alisa Reinhardt and Anthony facilities.
who already have such systems in place or are Bento, who are in the process of negotiating
legislation eradicating some of the more Other valuable clauses of franchise codes
exploring the possibility of introducing their
problematic practices some OEM importers in included a ban on OEMs installing another
own versions.
Australia undertake. dealership within 10 miles (16.1km) of an
At the September 2018 AADA National existing store, and an appeals process that
Dealer Convention and Expo, the Labor Having unanimously passed the Californian allows Dealers to appeal to a government-
Party committed to a Code of Conduct – a legislature, the bill was vetoed by then- appointed, low-cost tribunal should OEMs try
commitment the Coalition matched prior to Governor Jerry Brown because he was to dismiss or not renew a Dealer’s franchise
Christmas. concerned that the requirement for agreement.
manufacturers to pay Dealers retail rates for
During NADA 2019, AADA held a series of warranty work would raise the price of repairs AADA also spent time with dealer association
meetings with our international friends in for car owners. leaders from other US states, plus those from
San Francisco, picking up vital background India, Canada, Italy and Brazil. We have
information that will assist us in negotiating That should not be the case, because the cost of learned a lot from these meetings and we
the formation of the code. warranty is a cost to the OEM rather than the will be incorporating this into our thinking
retail customer; however OEMs in some states as we move forward to the Automotive Code
have added ‘a warranty retail rate recoupment discussions this year.
Buying or Selling a Dealership.
Citywide Dealership Consultants can
help negotiate your business sale or
business purchase with confidence.
• BUY/SELL ADVISORY • BUSINESS VALUATIONS • DUE DILIGENCE • OEM/FINANCIER PROPOSALS • PROCESS CONSULTING
www.citywideconsulting.com.au John Mihelakis 0431 110 774 • john@citywideconsulting.com.au
automotivedealer.com.au | MARCH 2019 | 15POLICY Australian Automotive Dealer Association
UNFAIR CONTRACT TERMS AND WARRANTY
AUDITS – LIMITATIONS AND OPPORTUNITIES
The inclusion of warranty policy terms with requirements of a small business contract
Vinesh George the onerous requirements mentioned above means that Dealers are not protected from
Company Secretary would likely be deemed unfair. The warranty UCTs in the ACL.
and Legal Counsel, policy terms place an unbalanced burden
AADA | Principal, on Dealers to conform to the stringent There are, however, two possible solutions
VS George Lawyers requirements of the distributors and also that could assist Dealers. The first is the
place all the risk of an express manufacturer existence of the Motor Dealers and Repairers
P
warranty on Dealers when product issues Act NSW and, more specifically, s142 of this
rotections for consumers against
are the responsibility of the distributor and Act, which contains the UCTs legislation
unfair contract terms (UCTs) in
manufacturer. The warranty policy terms are from the ACL. This protects Dealers in NSW;
standard form contracts were first
unreasonable and unnecessary for protecting however, Dealers outside NSW do not benefit
introduced into the ACL in July 2010. The
the distributor’s legitimate interests, as from the protection. A second solution is
extension of these protections to standard
Dealers can have proof of the validity of for Dealers to restructure their businesses
form small businesses contracts came more
their warranty claim and yet can still have so that they are able to meet the legislative
than six years later, in November 2016,
their warranty payments clawed back. requirement in the ACL of having fewer than
along with a Government commitment
Furthermore, the warranty policy terms cause 20 employees.
to review this extension within two years
of the extension. In accordance with its financial detriment to Dealers, as they are
The purpose of UCT legislation is to
commitment, a discussion paper was forced to cover the expense of the warranty
protect from entering into standard form
released in November 2018 with the purpose repairs themselves.
contracts vulnerable parties who lack
of seeking feedback from stakeholders on the skills, resources, time and bargaining
Under current legislation, most Dealer
the impact of extending protections and power to negotiate for their contractual
agreements are effectively excluded for not
whether the objective set for original reform interests. Extending these protections to
meeting the definition of ‘small business
has been met. The Australian Automotive small businesses came out of the recognition
contract’ and this leaves Dealers unprotected
Dealer Association (AADA) responded to that small businesses can often be just as
and vulnerable to exploitation by distributors.
the discussion paper supporting the review, vulnerable as consumers when entering
but noted some of the key limitations of A contract is a small business contract if: into contractual relationships with large
UCTs for Dealers. The extension of UCT organisations. Dealers, just like small
legislation to small business contracts has (a) the contract is for a supply of goods or businesses and consumers, have the same, if
been a positive change for many; however, services, or a sale or grant of an interest not more, vulnerabilities when entering into
its limited scope has sidelined Dealers from in land; and contractual relations with distributors.
making any use of this protection.
(b) at the time the contract is entered into, An improved and more inclusive legislation
Several distributors include UCTs in their at least one party to the contract is a should focus on including all franchise
warranty policy documents which require business that employs fewer than 20 agreements. This would be more aligned
Dealers to conform to strict process persons; and with the stated aims of UCT legislation to
requirements. Failure to comply with protect vulnerable parties in large standard
these strict requirements is often enough (c) either of the following applies:
form contracts. The advantage of legislating
justification to claw back warranty payments to include all franchisees is that it recognises
due to Dealers. For example, some warranty (i) the upfront price payable under the
contract does not exceed $300,000; the true source of the problem which
policy documents require strict adherence to is inequality in size and power between
the following: contracting parties. Current legislation
(ii) the contract has a duration of more
than 12 months and the upfront is attempting to deal with this issue in a
1. Dealers must take a digital photo of a
price payable under the contract piecemeal way by slowly and inefficiently
vehicle part replaced under warranty.
does not exceed $1,000,000. expanding the coverage of UCT laws.
2. Dealers must have a warranty repair order
A dealer agreement between a Dealer and For further information,
signed by the service manager.
distributor usually fails to meet parts (b) contact Vinesh George on 0404 077 078
3. Dealers must have entered clocking on of the legislation. Most dealers employ far or email vinesh@vsgeorge.com.au
and off times when conducting warranty more than 20 employees. Failure to meet the
repairs.
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WE ARE CAR PEOPLE.
WE KNOW TECHNOLOGY.2019 AADA NADA SHOW STUDY TOUR FEATURE Australian Automotive Dealer Association
TOUR DELEGATES GET SOCIAL
AT NADA SAN FRANCISCO
T
oday everything starts with Google, and Then there are the brightly coloured bicycles
this year’s AADA NADA Study Tour and e-bikes Googlers use to get around
to San Francisco in California was no Googleplex. “We just jump on the closest one
exception. and pedal to where we need to go, then leave it
for the next person.” said our guide.
Our hosts at Googleplex (a sprawling
16,700m2 campus designed by Clive
Wilkinson Architects in 2005) welcomed us
with yummy lattes, cappuccinos, muffins and
more before we started our tour.
While most of us were impressed by this
facility, we were completely stunned hearing
what the company provides for its employees.
Our guide told us that she and her colleagues
never go hungry; the company serves free
pizza, salads, tacos, vegetarian dishes, pastas
and deserts at one of the many cafeterias and
The next stop was the conference room, where
delis spread across the entire complex.
our guide walked us through an informative
Flower power presentation of how partnering with Google
would help Dealers better understand their
On our way to the conference room we were Our guide also mentioned the recreational individual markets and help them sell more
invited to smell the whimsical Alfa Flowers facilities available to employees, including cars.
and were blown away when they magically bowling alleys, swimming pools, dance
changed colours to match the fun moods and studios, gyms, tennis and basketball courts, Note for those who are tempted to apply for a
emotions we expressed. massage rooms and nap pods. job with Google: the company receives more
18 | MARCH 2019 | automotivedealer.com.authan one million applications a year and only Then the 35-strong AADA group and Commenting on the size and scope of the
0.5 per cent are actually employed. the 20,000-plus US Dealers and industry NADA Expo, Motorweb’s Paul Hardiman said,
executives were invited to the official J. “Very informative, wide range of products with
Then it was back on the bus for lunch and D. Power “Escape from Alcatraz” NADA multiple providers to choose from.”
another enlightening presentation from the Welcome Reception at the plush San Francisco
Gumtree team at eBay in San Jose. Marriot Marquis.
This fun evening was a great way to kick off Of special interest to the writer were the
the Convention, catch up with colleagues and SpinCar and Snap21 booths. Both were
While eBay’s HQ may not have the same wow make new friends while enjoying cocktails, Dealer magnets generating exceptional
factor as Google’s, it was still pretty impressive delicious finger food and immersing ourselves sales and success, with SpinCar winning the
– as was our lunch. in the history of Alcatraz, a former maximum 2019 NADA Automotive Website Award
security prison known as ‘The Rock’. for Website Merchandising for the third
Their pitch to us covered how to best utilise
consecutive year.
the assets available to Dealers using the The greatest show on earth
combined resources of eBay motors, Gumtree With so much activity in the Expo it was hard
and Marketplaats. finding time to attend some of the workshop
sessions, which included Fixed Operations,
Oh what a Sunnyvale feeling!
Human Resources, Dealer/Executive, Legal &
From eBay we travelled to one of San Regulatory and, of special interest to me, two
Francisco’s most successful dealerships, Marketing sessions.
Sunnyvale Toyota in Sunnyvale.
‘Five Digital Marketing Myths That Can
Hurt Your Bottom Line’ was presented by
True Car’s Kerri Wise, who firstly tackled a
number of Dealer marketing myths that create
inefficiencies in their marketing spend, and
Over 500-plus companies showcased then identified alternate strategies aligned with
thousands of products in the three main halls actual consumer behaviour.
spread across three blocks and 35 hectares in
SOMA (South of Market). The second workshop, ‘Cutting Through
The Clutter’, was presented by Paul Caldwell,
Exhibitors included OEMs Toyota, Fiat Partner at CK Advertising, a TraDigital
Chrysler and Ford. Other product categories Agency based in Florida. Paul discussed
represented covered Service and Parts, Crash how digital and traditional advertising can
Repair Equipment, New and Used Car Sales, work hand-in-hand to deliver the results
Finance, IT, Accessories and Marketing. Dealers demand in today’s ultra-competitive
environment.
Sunnyvale Toyota is part of the Price
Simms Auto Group, which sells 21 different WES LUTZ special guest at International
automotive brands in seven locations in the Relations Dinner
San Francisco Bay Area.
In the evening we attended the AADA
General Manager, Mike Shum, explained Gumtree International Relations Dinner at
to the group how they sell around 600 new up-market Morton’s The Steakhouse on Union
and used vehicles per month, using their Square, considered by many respected food
sophisticated online process as well as writers to be California’s premier steakhouse.
traditional on-the-floor-sales methods.
automotivedealer.com.au | MARCH 2019 | 192019 AADA NADA SHOW STUDY TOUR FEATURE Australian Automotive Dealer Association
New NADA Chairman calls on Dealers to
get behind the association
In the afternoon everyone moved to the
NADA General Session in the Moscone
South Ballroom where Wes Lutz, the 2018
NADA Chairman, passed over the Gavel of
Leadership to Charles Gilchrist, the new 2019
NADA Chairman.
Our special guest was Wes Lutz, a 40-year The room features pool tables, shuffle ball
retail automotive veteran and 2018 NADA and two walls of giant TV screens showing
Chairman. Wes highlighted the challenges snowboarding, basketball, NFL, baseball and
facing the auto industry, such as self-driving more.
cars, ride hailing and EVs. Other distinguished
guests included seven former NADA This final event of the AADA NADA Study
Chairmen as well as numerous international Tour, hosted by Corporate Blue, was a great
visitors. way to relax and exchange ideas, catch up with
friends, have a beer and enjoy some delicious
Saturday morning was the last opportunity to In his first address to delegates Gilchrist, a food.
visit the NADA Expo, check out the booths Dealer from Texas, urged every Franchised
missed on the previous day and participate in Dealer to get involved in NADA, saying that John Fountain of Saleslogs summed up
more workshop sessions. the auto retail sector needs engaged and active the evening and tour brilliantly when he
association members “now more than ever.” commented: “Had a fantastic time networking
with people from the industry.”
While Gilchrist’s address was all business,
Emmy award-winning actor and comedian
Dana Carvey’s was all fun, as he kept us
entertained with impersonations of US
AADA NADA Show 2020
politicians and Presidents, hilarious jokes and Study Tour - Las Vegas
entertaining stories from his acting career.
For information about the AADA
As someone on the way out of the Ballroom NADA Show 2020 Study Tour to
was heard to say “Carvey is one funny dude.”
Las Vegas, 13-16 February, 2020
Australia Day celebrations contact:
One that particularly interested me was ‘Seven Patrick Tessier
Then it was time to celebrate Australia Day at
Futurist Social Media Trends for Success P: (03) 9576 8900
the Golden Gate Tap Room.
in 2019’ by Joey Little from AutoAlert. He E: patrick@aadaconvention.com.au
examined the seven social media marketing The party, which was sponsored by Carsales
and content trends that will be prevalent and Pentana Solutions, was held on the top
in 2019, how they will directly impact on
Or Click Here to Register
floor of the three-storey Tap Room – a massive
Dealerships and ultimately increase sales adult playground and boutique brewery Your Interest Online!
through communication and branding. located on Union Square.
20 | MARCH 2019 | automotivedealer.com.auYou can also read
