GET YOUR DEALERSHIP READY FOR 2020 + BEYOND AT AADA 2019 CONVENTION
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OFFICIAL PUBLICATION OF AADA JULY 2019 | ISSUE 27
GET YOUR DEALERSHIP
READY FOR 2020 + BEYOND
AT AADA 2019 CONVENTION
JAMES VOORTMAN TAKES OVER AS AADA CEO
ALL NEW EXPO OPEN DAY & TEAM EVENTS PROGRAM
LUNCH WITH A LIVING LEGEND: SIR PETER COSGROVE AK MC
PANEL SESSIONS TACKLE FRANCHISE RELATIONS, GENDER
DIVERSITY, F&I & DEALERSHIP ROI
www.automotivedealer.com.au PRINT POST 100019106
Steven Tong, Mechanic
Member since 2002
It’s my
choice.
Make it
I’ve always loved working with cars.
When I retire, I want to continue
to share this passion with others,
spend time with my family, and travel.
yours.
With MTAA Super, I know I’m in
good hands.
1300 362 415
mtaasuper.com.au
This document is issued by Motor Trades Association of Australia Superannuation Fund Pty. Limited (ABN 14 008 650 628, AFSL 238 718) of Level 3,
39 Brisbane Avenue Barton ACT 2600, Trustee of the MTAA Superannuation Fund (ABN 74 559 365 913). Motor Trades Association of Australia Superannuation Fund
Pty. Limited has ownership interests in Industry Super Holdings Pty Ltd and Members Equity Bank Limited. The information provided is of a general nature and does
not take into account your specific needs or personal situation. You should consider the MTAA Super Product Disclosure Statement in making a decision
(mtaasuper.com.au/handbooks).
WELCOME Australian Automotive Dealer Association
CONTENTS ISSUE 27 | JULY 2019
INDUSTRY NEWS
Potential High Court Challenge Over Victorian LCT.................................................................4
Voortman To Take Over As CEO..................................................................................................5
Bailment And Floor Plan Facilities: The Risks..........................................................................6
ACL – When Does A Consumer Lose The Right To Reject Their Vehicle?.............................7
CONTACT AADA The Impact Of The Federal Election On The Retail New Motor Vehicle Industry..................8
Office 6, Level 4, 150 Albert Road Application Of LCT To Trade-Ins................................................................................................10
South Melbourne, VIC 3205 Human Capital Index...................................................................................................................13
CONTACT AUTOMOTIVE DEALER FEATURES
936B Glenhuntly Rd,
Electric Vehicles To Outsell Conventional Cars Within 20 Years...........................................15
Caulfield South, VIC 3162
UK Dealerships To Need EV Accreditation...............................................................................15
Issue No. 27 | JULY 2019
Book Now For NADA 2020.........................................................................................................16
PUBLISHER: AADA More Aussies Plan To Finance At Dealership, But Online Threat Is Real............................17
MANAGING EDITOR: Luke Prendergast Telephone Skills: Boost Your Sales And Customer Happiness............................................20
PRODUCTION MANAGER: Stace Agombar AADA 2019 NATIONAL DEALER CONVENTION & EXPO FEATURE
CREATIVE DIRECTOR: Charles Bayer Anjali Rao Returns As Convention Host...................................................................................23
ART DIRECTOR: Nick Murphy
To 2020 + Beyond.........................................................................................................................24
Political Slant For Opening Breakfast......................................................................................25
ADVERTISING MANAGER: Geoff Vine
geoff@automotivedealer.com.au
Be Informed - Don’t Miss The General Session......................................................................26
Mobile: 0413 854 779 NADA VP Weighs In On Disruption............................................................................................27
Phone (03) 9576 9944 | Fax (03) 9576 7277 Automotive Shopper Engagement: Lessons From eCommerce Leaders..........................29
Show Your Footy Skills In Valvoline Handball Comp..............................................................29
AUTOMOTIVE DEALER
DELIVERY/CHANGE OF ADDRESS Expanded Team Events Program Now Includes Marketing Session...................................30
(03) 9576 9944 or JLR Boss To Deliver Keynote Address.....................................................................................32
editor@automotivedealer.com.au Take Advantage Of New Free Expo Open Day.........................................................................33
EDITORIAL Don’t Miss Sir Peter Cosgrove AK MC At The Carsales Luncheon.......................................34
editor@automotivedealer.com.au Join Dr. Richard Harris SC OAM For The Auto-It Opening Breakfast..................................35
EDITORIAL & ADVERTISING OFFICE What Will An Automotive Code Mean For You?.......................................................................36
936B Glenhuntly Rd, Gender Diversity In The Workforce...........................................................................................39
Caulfield South, VIC 3162 Prepare Yourself For F&I Changes...........................................................................................40
Maximising ROI In Tough Times................................................................................................41
Succession Plan Or Sell?............................................................................................................42
Service Department: The Missing Millions..............................................................................42
No responsibility is accepted by the publisher Connect A Multi-Generational Workforce................................................................................43
for the accuracy of information contained Used Cars - Structuring Your Dealership To Effectively Meet
in advertisements in the Automotive Dealer
magazine. Publication of any advertisement does The Needs Of Today’s Consumer..............................................................................................43
not constitute endorsement by the publisher
of any product, nor warrant its suitability.
Time Value Of Money For Used Cars........................................................................................44
Advertisements are published as submitted by Driving F&I Excellence In 2020..................................................................................................44
advertisers.
Create A Winning Digital Platform............................................................................................45
COPYRIGHT
No part of this magazine may be reproduced What Are Customers Really Seeing Before They Get To Your Showroom?........................45
without the publisher’s written permission.
How Employee Turnover Is Killing Your Profit........................................................................46
CONTRIBUTORS
The views expressed in Automotive Dealer by
The Evolution Of Mobility – Global Trends And What It Means For Australian Dealers.....46
external contributors and advertisers are not Maximising Your Fixed Operations Sales And Systems.........................................................47
necessarily those of AADA.
Removing Friction: Becoming A Consumer-Centric Dealership..........................................47
AUSTRALIAN MOTORSPORT
@AADA_ASN AUTOMOTIVE DEALER
ASSOCIATION New Touring Car Series: Is This The Start Of Something Big Or Small
For Australian Motor Sport?......................................................................................................18
WE’D LIKE TO HEAR FROM YOU.
We’d like to hear from you about what’s been supporting junior sporting clubs or sponsoring a It’s a pity that the community work being done
happening at your dealership that you think charity event. by Dealers is a well-kept secret. We intend to
could be worth passing on to our readers. change that. AADA is determined to generate a
We would like to know.
greater respect for new car franchise Dealers
It can be anything from a unique sale, a fleet
Whatever the story you have, it will be good as compassionate business people. Part of our
deal or a story about a member of your staff who
reading. Send us the information and key strategy is to remind the media, politicians and
recently accomplished a notable feat.
contact details and we will follow it up. If you opinion makers that, by employing over 66,000
It could be a ‘feel good’ community initiative have photographs of the endeavour so much people, AADA members make a substantial
you have undertaken involving local schools, the better. contribution to the Australian economy.
INDUSTRY NEWS Australian Automotive Dealer Association
POTENTIAL HIGH COURT
CHALLENGE OVER
VICTORIAN LCT
A
ADA is investigating the possibility There are already so many taxes on cars in informed senior counsel talking to us about
of mounting a High Court challenge Australia: a 5 percent tariff on cars imported aspects of this tax that may be in breach of our
against the Victorian Government’s from the UK and Europe, 10 percent GST plus Constitution.”
planned increase of stamp duty that will the Federal Government’s 33 percent LCT on
effectively act as a further Luxury Car Tax. vehicles over $66,331. AADA considers this It is unclear whether it is possible to challenge
‘Luxury’ Car Tax especially unfair considering a government regarding the legality of a tax,
AADA is consulting with legal experts to the numbers show that Toyota customers pay but Mr Blackhall said AADA is determined
determine whether states have taxing powers more in LCT than most buyers of prestige to find out exactly what taxing powers state
under the Australian Constitution. brands. governments have under the Constitution and,
if necessary and feasible, take that challenge all
Victorian stamp duty is currently 4.2 percent The Sydney Morning Herald and The Age the way to the High Court.
of the total cost of cars below the federal LCT recently revealed that Toyota customers
threshold of $66,331 and 5.2 percent for cars collectively pay more than buyers of Ferraris, The potential ramifications of an increase
over this amount. The Victorian Government’s Porsches, Lamborghinis and most other in stamp duty by one state could include
May budget stated that it would increase the prestige brands under the Federal LCT. consumers purchasing their new vehicle in
stamp duty on cars over $100,000 to 7 percent, another state, buying a car below the threshold
while for cars selling for more than $150,000 Mr Blackhall said if Victoria was allowed to or exploiting other loopholes, including
stamp duty would rise to 9 percent. These effectively add its own LCT, other states and enlisting the help of Dealers to avoid the
changes will take effect from 1 July 2019. territories would follow suit, adding to the higher stamp duty.
already unfair impost on Australian motorists
This comes a year after Queensland introduced and automotive Dealers. Western Australia One factor that might assist AADA in this
an extra 2 percent stamp duty on vehicles already imposes 6.5 percent stamp duty on fight is the negotiations regarding a Free Trade
priced over $100,000. new cars priced over $50,000. Agreement with Europe. Vehicles imported
from Japan, Thailand, South Korea and the
With the NSW Opposition proposing a similar “Treasurers are treasurers; once they see USA are tariff-free, but those from the UK and
stamp duty increase before it was defeated one of their counterparts dip into the car Europe still attract a 5 percent import tariff.
in this year’s election, AADA CEO, David buyer’s wallet, our concern is it will become
Blackhall, said the Association is concerned contagious and other states might get the same The EU is likely to regard the Federal LCT and
other states might follow suit. AADA is, idea,” Mr Blackhall said. state stamp duties as ‘discriminatory tariffs’
therefore, considering a constitutional and could pressure the Australian Government
challenge over what is effectively a state-based “We are taking advice on the legality of what’s to remove or reduce them.
LCT. happened, and there are serious-minded, well-
4 | JULY 2019 | automotivedealer.com.au
INDUSTRY NEWS Australian Automotive Dealer Association
VOORTMAN TO TAKE OVER AS CEO
A
ADA is pleased to announce the with the Australian Automobile Association for the next six months, to assist with the
appointment of James Voortman as and 18 months as Adviser to the Office of the transition and continue his work on the
the Australian Automotive Dealer Minister for Urban Infrastructure. development of an Automotive Franchise
Association’s new Chief Executive Officer, Code of Conduct.
commencing his responsibilities on 1 July The AADA Board is thrilled that Mr
2019. Voortman has taken up this key position and “The board and I would like to sincerely thank
is looking forward to working with him to outgoing CEO, David Blackhall, for his hard
further the interests of franchised new car work and dedication over the last three years,”
Dealers across Australia. Mr Keating said.
AADA Chairman Terry Keating said Mr
Voortman was the outstanding candidate of
those who expressed interest in the position.
“We are pleased that he has accepted the role.
Given his role as our Director of Policy, we
expect a strong continuity across both policy
and advocacy on behalf of our members,” Mr
Keating said.
“James also brings experience from working
with other associations in the automotive
sector and most recently as an advisor to a
federal minister.”
Mr Keating acknowledged the ongoing role of “David provided invaluable leadership and is
Mr Voortman has extensive policy and AADA Chief Operating Officer, Brian Savage, largely responsible for the significant gains the
automotive advocacy experience and has who provides significant industry experience, AADA has made in recent years.
worked as an advisor to a Federal Minister as having worked in dealerships, OEMs and
“Every new car Dealer in Australia owes
well as in several senior policy roles within a automotive industry associations.
David a debt of gratitude for the focus,
range of industry associations. He has been
“Brian was appointed to this role earlier in commitment and, in many cases, the
responsible for all political engagement and
the year and will play an important role in resolution he has brought to issues in a time
external and internal communication strategy.
the AADA secretariat, with a strong focus on of extreme disruption. Whilst he is stepping
Mr Voortman has been deputy CEO of working with our most important resource, down from his current role of CEO, he has
AADA since February and has been Executive our members,” Mr Keating said. agreed to continue with us in a consulting role,
Director, Policy & Communications since essentially to complete our work in making a
September 2017. He previously spent more He paid tribute to outgoing CEO, David mandatory code for our industry a reality.”
than three years as National Policy Manager Blackhall, who will continue as a consultant
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INDUSTRY NEWS Australian Automotive Dealer Association
BAILMENT AND FLOOR
PLAN FACILITIES:
THE RISKS
T
he world of bailment agreements, such as the Dealer not remitting funds to Sales of motor vehicles on consignment
floor plan facilities, consignment the financier within the contractual period,
sales, personal property securities then the financier may consider its other Most states impose legislation in relation
legislation, the tort of conversion and legal rights including its right to immediate to the licencing of a Dealer and part of the
transfer of title is a legal and financial repossession of vehicles. legislative requirements, certainly in NSW,
maze that all of the participants, namely is that in relation to sales of motor vehicles
bailment/floor plan financier, Dealer, For instance, if at any given time a on consignment. Consignment sales often
consumer and retail financier, all enter but financier’s risk is several million dollars involve members of the public but can be
struggle to exit when things go wrong. because there is a time lag between the used as a method of financing by a financier.
goods having been sold and delivered to
Given the industry is currently experiencing the customer but not yet remitted to the The requirements include the establishment
many challenging operating conditions the financier, then the financier may take the of a trust account on behalf of the consignor
risk of breaching financial agreements with view that such a risk cannot be tolerated and payment into the trust account of all
financiers is higher than in recent years. and seek to repossess all of its bailed goods amounts received by the Dealer in relation to
and terminate or suspend its financing until the particular vehicle. Usually the Dealer has
In this article we consider some general the risk exposure is rectified. Such actions 1 business day to ensure the funds are in the
issues and risks to Dealers of certain actions would be extremely damaging for a Dealer trust account. Failure to comply incurs fines.
which may put them at financial and/or as in effect it would no longer have stock
legal risk. Dealers are encouraged to seek State legislation commonly also enables
to trade and the commercial damage to
independent legal advice on their specific disciplinary action against a Dealer for failure
reputation could be severe.
circumstances if there are concerns in to comply with the requirements of the Act.
relation to these matters. The immediate right to possession may This could cause a loss of licence which in the
also give the financier a further cause of case of consignment sales is a likely outcome.
Bailment/Floor Plan Finance Agreements action known as conversion. Conversion is
Conclusion
when one deals with a chattel, in this case
Most Dealers will have in place some form
a vehicle, in a manner repugnant to the Further to the above, Dealers need to manage
of bailment or floor plan facility agreement.
immediate right of possession of the true their bailment/floor plan facility agreements
The specific terms and conditions of
owner. Importantly, the tort of conversion with great care and ensure that they are
each agreement should be examined and
may also affect a transaction between complying with the terms of their agreements.
understood by Dealers.
Dealers in relation to the sale of a vehicle. If things are not going to plan, Dealers should
A common theme in most of these identify it early and contact their financial
The risk of curtailments also increases
agreements is that the Dealer’s financier advisors and floorplan providers to develop
in periods of lower demand and causes
has the right to conduct an audit to ensure a correction strategy. Holding off in the hope
cash flow pressures for Dealers which in
that the Dealer is complying with the terms that the market will improve is not a good plan,
turn lead to poor financial management
of the agreement. If the audit reveals risks, especially when inadvertent breaches and poor
decisions and risks.
financial management could lead to severe
consequences in tough industry conditions.
6 | JULY 2019 | automotivedealer.com.au
INDUSTRY NEWS Australian Automotive Dealer Association
ACL – WHEN DOES A CONSUMER LOSE THE
RIGHT TO REJECT THEIR VEHICLE?
consumer to whom they are supplied causes the vehicle; the vehicle was damaged after
Vinesh George them to become of unacceptable quality, or fails being delivered to the consumer, and the
Company Secretary to take reasonable steps to prevent them from vehicle, part or component has been attached
and Legal Counsel, becoming of unacceptable quality; and they are to or incorporated in some other property and
AADA | Principal, damaged by abnormal use.” cannot be detached without damaging it.
VS George Lawyers
While the law does not define abnormal use, This would mean, for example, that even if a
L
ike other consumers, under Australian the wear and tear and gradual deterioration consumer establishes that their vehicle is of
Consumer Law (ACL), vehicle of a vehicle through normal use does unacceptable quality as a result of a flaw in the
purchasers have a consumer guarantee not qualify. The breaking down of parts, manufacture of the vehicle, they will not be
that their vehicle is fit for purpose, acceptable scratching, scuffing and discolouration is a entitled to reject the vehicle if they have since
in appearance and finish, free from defects, normal and predictable part of vehicle use caused unrelated damage to their vehicle. The
safe and durable. Consumers whose vehicles and is not considered abnormal. An example most likely scenario here is where a consumer
have major faults and are therefore not of of abnormal use could include leaving the has not looked after the vehicle and it suffers
acceptable quality have the right to reject roof of a convertible vehicle open resulting in from significant interior and/or exterior
their goods and seek a refund or replacement interior damage, or using it over rough terrain damage – something more than fair wear and
from the Dealer. There are, however, for which a vehicle is not suitable. A consumer tear.
circumstances outlined in the ACL in which cannot reject their vehicle on the basis of
a consumer will lose their right to reject unacceptable quality if they were responsible It seems logical that a consumer who has failed
and therefore Dealers and manufacturer/ for it and if they used the vehicle abnormally. to look after a vehicle should not benefit from
distributors are not obligated to replace or the right to reject. This is why s262 provides
refund the customer’s vehicle. Even if a consumer is not responsible for some qualifications to the consumer’s rights.
causing the vehicle to be of unacceptable Dealers and manufacturers/distributors
For a consumer to be entitled to reject their quality there are still a number of are entitled to take this into account when
vehicle on the basis of unacceptable quality circumstances outlined in section 262 of determining a consumer’s right.
they must not have caused, by action or the ACL that could result in a consumer
inaction, the unacceptable quality. losing their right to reject a vehicle. These For further information,
include: the rejection period has passed; the contact Vinesh George on 0404 077 078
Section 54(6) of the ACL states that, “goods consumer has lost, destroyed or disposed of or email vinesh@vsgeorge.com.au
do not fail to be of acceptable quality if the
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INDUSTRY NEWS Australian Automotive Dealer Association
THE IMPACT OF THE FEDERAL ELECTION ON
THE RETAIL NEW MOTOR VEHICLE INDUSTRY
behaviours within the franchised new car retail by the Department of Industry, Innovation
Evan Stents industry which were (and are) not effectively and Science designed to promote growth
Lead Partner, being prevented by the existing Franchising in small business. $1.4million in funding
Automotive Industry Code of Conduct. has been allocated over two years for the
Group, HWL development of that package.
Ebsworth Lawyers In the months following the ALP's
announcement the Coalition also announced In its response to the AADA pre-election
its support for the introduction of a Dealer questionnaire, the Coalition stated
T
he months that followed the AADA Code, and there were several other significant (presumably referring to the Code) that
Convention in September 2018, leading policy announcements. it would implement reform to support
up to the May 2019 Federal Election, 'appropriate commercial dealing and
saw many significant developments in AADA's advocacy for the Dealer Code had competition in the new car retail supply chain'
policy-making for the Australian retail new come in the context of a period of fairly and that it was investigating 'reforms to level
motor vehicle industry. As a result of the longstanding scrutiny by the ACCC and ASIC the playing field in relationships between
Coalition Government's recent re-election, into the conduct of motor vehicle Dealers and Dealers and manufacturers'. No further detail
the automotive industry can expect to see manufacturers, culminating in several reports was offered, but the specific aspects of the
further developments arising out of polices in 2018 that were critical of the industry. It also 'un-level playing field' that AADA has cited
concerning a proposed Dealer Code, the came through the opportunity presented by in its submissions to the Parliamentary Joint
outcome of the Federal Parliamentary Joint the Parliamentary Joint Committee's inquiry Committee included:
Committee's inquiry into franchising and into the franchising sector.
the Royal Commission on the Banking, • establishing tenure and renewal
Superannuation and Financial Services Although some of the detail in the major rights commensurate with levels of
Industry (Royal Commission). parties' policy announcements on the investment made by Dealers;
automotive industry differed, the AADA's pre-
On 4 September 2018, at the AADA election scorecard ranked both parties equally • making renewal options exercisable by
Convention held at the Gold Coast Convention across four broad policy categories – including dealers (not manufacturers) provided
Centre, the Shadow Treasurer, Dr Andrew ruling out used car imports. So now what? the Dealer is not in breach of their
Leigh, announced that the Australian Labor Dealer agreement
Party would, if elected, enact a Dealer-specific In terms of the development and
automotive industry code (a Dealer Code). implementation of the Dealer Code, the • alternatively, prohibiting
Coalition announced in December 2018, in manufacturers from issuing non-
The announcement came after AADA had its Budget update – the Mid-Year Fiscal and renewal notices without first issuing a
advocated strongly for a Dealer Code to Economic Outlook (MYEFO) papers – that written statement setting out why the
help address the power imbalance between the Dealer Code would be developed as part of manufacturer has decided not to renew
Dealers and manufacturers – and to address a broader range of reforms being considered that Dealer, what steps the Dealer could
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take to address those reasons and what The extent to which the draft Dealer Code • abolish the point-of-sale exemption
rights the Dealer has to challenge those addresses some or all of these issues is yet to of retail Dealers from the National
reasons if the Dealer disagrees; be seen. However, it will be the first piece of Consumer Credit Protection Act (in
regulation focused solely on the interactions practical terms, while some Dealers
• require manufacturers to buy between motor vehicle manufacturers and may obtain their own Australian Credit
back dealers' inventory of new and Dealers – as opposed to attempting a 'one Licence, the abolition of the point of
demonstrator vehicles, parts and tools size fits all approach' to regulating the entire sale exemption will likely result in
required to have been purchased by franchising sector. most Dealers being appointed as credit
Dealers, at the Dealers' cost price, representatives and thereby assuming
upon the expiry or termination of their In terms of vehicle emissions, the Coalition additional obligations to consumers).
Dealer agreements; announced before the election that it would
develop emissions policies for the reduction Finally, other than the development of the
• prohibit manufacturers from requiring, of vehicle emissions through the established Dealer Code or emissions policies, the
encouraging or facilitating Dealers to Ministerial Forum on Vehicle Emissions. The Coalition also announced in late March 2019
engage in 'pre-retail' or 'cyber car' sales Ministerial Forum was established in 2015 and that a Coalition Government would consider
reporting; has released a number of Regulatory Impact amending the existing unfair contract terms
Statements in respect of vehicle emissions, fuel regime so that it applied without the existing
• prohibit manufacturers from
efficiency and fuel standards. restrictive threshold on a relatively small
terminating Dealers for failing to meet
number of employees. If this proposal is
performance targets that are unrealistic The Government's response to the Royal enacted, subject to the detail of the proposal,
given manufacturers' market shares; Commission was released in February 2019. the unfair contracts regime will apply all
Among other things, it makes clear the small businesses, including motor vehicle
• prohibit manufacturers from
Government's intention to: Dealers. This will have its own consequences
prescribing how Dealers must respond
to consumer requests, complaints, on manufacturers independent to the
• establish a deferred sales model for
claims or legal proceedings in introduction of the Dealer Code (in particular,
the sale of add-on insurance requiring
circumstances where Dealers owe for example, in relation to unilateral variations
consumers to separately engage with
independent statutory obligations to to Dealer agreements).
the insurance provider rather than
consumers; and purchasing the insurance product at the This article was written by Evan Stents - Lead
same time as a motor vehicle; Partner, and Christian Teese - Senior Associate,
• limiting manufacturers' ability to
unilaterally vary Dealer agreements Automotive Industry Group | HWL Ebsworth
• provide ASIC with the ability to cap
– including by the implementation Lawyers
commissions that may be paid to motor
(or termination) of policies which are vehicle Dealers in relation to the sale of
made to operate as terms of the Dealer add-on insurance products; and
agreements themselves.
automotivedealer.com.au | JULY 2019 | 9
INDUSTRY NEWS Australian Automotive Dealer Association
APPLICATION OF LCT TO TRADE-INS
is likely to impact the Dealer’s margin previously payable in respect of any
André Spnovic (particularly if not factored into the total price previous sale or importation of the car, or
Partner, Indirect Tax, agreed with customers). Secondly, the ATO has
Deloitte Tax Services identified this as a risk area and, accordingly, c) The car is sold to another Dealer who
Pty Ltd Dealers should expect questions concerning quotes in relation to the sale. (See our
trade-in vehicles if subject to an LCT review. article on page 11 of the December 2018
edition of Automotive Dealer.)
Dealers who sell a trade-in that meets the
T
here is a misconception amongst some definition of a luxury car, i.e. a car with a Alternatively, in some cases where the scenarios
Dealers that Luxury Car Tax (LCT) is value above the LCT threshold, are likely to be above do not apply, Dealers may be entitled to
not payable in relation to sales of cars that required to account for LCT on the sale unless account for a reduced LCT liability compared
have been traded in. Whilst the circumstances any of the below scenarios apply: to that which would otherwise be payable. For
in which a Dealer is required to account for example, if the LCT that would be payable
LCT on sales of trade-ins may be limited in a) The car is more than two years old on the sale is greater than the total LCT
practice, Dealers should still be aware of the (meaning when sold, more than two previously payable in respect of any previous
scenarios in which they may be required to years have passed since the car was sale or importation of the car, the selling Dealer
account for LCT on these sales. imported into Australia) should be entitled to reduce the amount of
LCT it accounts for by the total amount of LCT
This is particularly important for Dealers b) LCT that would be payable on the sale previously payable. This is typically relevant for
for two key reasons. Firstly, any LCT liability is equal to or less than the total LCT cars that appreciate in value.
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Allianz Australia Insurance Limited (ABN 15 000 122 850) AFSL 234708.If a Dealer does not account for LCT, or to determine the LCT previously payable and knowledge of whether any LCT was payable,
accounts for a reduced LCT amount, in what evidence should selling Dealers hold and if so, how much was payable. Similarly,
relation to the sale of a trade-in luxury car, the to support their conclusion? The ATO has identifying the Dealer who previously sold the
Dealer should keep records to substantiate not specifically addressed this issue, however vehicle can be reliant on details included on the
why that position was taken. Dealers can often we suggest selling Dealers should conduct car, e.g. stickers or plates, or obtaining a copy of
readily produce evidence to support a view reasonable inquiries to determine the LCT the service logbook.
that scenario a) or c) above applies (where previously payable. These may include:
applicable). It can, however, be more difficult Selling Dealers should consider the information
for the selling Dealer to substantiate the amount • asking the person who traded in the gathered from their inquiries in light of LCT
of LCT previously payable (particularly as LCT vehicle whether they have any information principles. Call, email or other correspondence
payable under the LCT Act may not match to show the LCT that was payable and records should be kept to demonstrate the
the LCT that importers and/or Dealers have from whom they bought the car, and/or inquiries undertaken. If the LCT previously
accounted for earlier in the supply chain). This payable cannot reasonably be determined and
• asking the Dealer who previously sold the the other scenarios above do not apply, Dealers
is a consequence of the selling Dealer having no
vehicle how much LCT was payable when should consider taking a conservative position
direct involvement in the earlier importation or
they sold the car. and accounting for the full amount of LCT
sale/s of the car.
payable.
Conducting these inquiries can be challenging.
The question then becomes what level of
Often the person trading in the vehicle has no
investigation should selling Dealers undertake
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PH: 1300 880 057 • www.snap21.com.auINDUSTRY NEWS Australian Automotive Dealer Association
HUMAN CAPITAL INDEX
influence a dealership’s performance through Accepting, of course, that there are many
Randall Bryson its people. The BDO Human Capital (HC) factors influence overall performance, the
Partner, Index looks to combine critical workforce largest single driver relates to people. It comes
BDO Automotive elements, such as availability, capability and as no surprise then that there is a positive
engagement, as well as labour cost measures, linear correlation between the BDO HC Index
to determine which of these elements can lead result and the net profit to sales achieved for
to more sustained dealership performance dealerships reviewed.
E
mployees continue to be the single and improvements in workforce productivity.
The BDO HC Index will allow leaders to focus For further information on the BDO Human
largest expense in a dealership business
attention on the areas that provide the highest Capital Index, please contact the following
and there is no doubt the effectiveness
return on investment. BDO representative-
of your people is the difference between
outstanding and average results, which CRISTIAN ULLOA
Whilst the BDO HC Index can draw
is more pertinent in challenging trading Partner – Human Capital
attention to the critical workforce dynamics
conditions. Understanding the key influences Direct: +61 7 3237 5950
of a dealership, it is heavily influenced by
that differentiate high performers is difficult, Mobile: +61 404 800 931
the industry and the organisational focus. A
but critical in unlocking the full potential of Cristian.Ulloa@bdo.com.au
more dynamic industry, such as automotive
your workforce.
retail, will need to pay more attention to its
MARK WARD
BDO have developed a framework to assist in workforce capability and ensure emerging
Partner - Automotive
understanding the impact your workforce is capabilities are identified and addressed early
Direct: +61 7 3237 5744
having on achieving your strategic ambitions. and regularly.
Mobile: +61 402 443 566
Unlike more traditional disciplines, human Mark.Ward@bdo.com.au
Higher performing dealerships tend to have a
resource (HR) professionals have struggled to
BDO HC Index result of 6 or above, whereas
develop a method of valuing and assessing the RANDALL BRYSON
the below average performing dealerships
impact its workforce can have on the success Partner - Automotive
tend to see results below 4 on the 10-point
of a dealership. Direct: +61 7 3237 5792
BDO HC Index scale. What appears to have
Mobile: +61 418 778 265
In conjunction with our clients, we have the greatest impact on performance for higher
Randall.Bryson@bdo.com.au
developed a methodology that moves us performing dealerships is their ability to retain
closer to understanding the critical levers that key elements of their workforce.THE RIGHT CHOICE FOR
YOUR DEALERSHIP
HERE’S A FEW REASONS WHY....
• HERITAGE • GUARANTEED SUPPLY
• PRODUCT RANGE • TECHNICAL SUPPORT
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“Having a 25-year business relationship in the motor
industry is a lot more than dollars and cents.
It is based on TRUST, RELIABILITY and PEOPLE.
That’s why Valvoline has been so successful.”
- Alan Johnstone
WE WELCOME YOU TO CALL BARRY BREEN ON 0417 422 875 OR MARK MACLURE ON 0418 366 086
TO DISCUSS HOW WE CAN CONTRIBUTE TO YOUR BUSINESS.FEATURES Australian Automotive Dealer Association
ELECTRIC VEHICLES TO OUTSELL
CONVENTIONAL CARS WITHIN 20 YEARS
W
orldwide sales of electric vehicles million sales in 2018 and EVs just 2 million. Europe and the US growing their share to 20
(EVs) will overtake those of Half of those sales are in China, the world’s percent and 16 percent respectively.
traditional internal combustion largest EV market.
engine (ICE) passenger vehicles within 20 This change could happen ever faster if nations
years, according to research published last Even in China, EVs currently make up less adopt more progressive emissions targets.
month. than five percent of passenger car sales, and Nine countries, including Denmark, Italy, and
the ratio is not much better elsewhere, with Norway, have already committed to banning
Bloomberg New Energy Finance predicted six percent in the United States and only 0.2 ICE vehicles.
in May that EV sales would top 50 million by percent in Australia.
2038, surpassing the 47 million conventional It will, however, still be a while before EVs fully
passenger vehicle sales. Within two more years Things are slowly changing. China last year replace the current fleet of ICE vehicles. The
EV sales will reach 56 million, 10 million more had its first fall in car sales in 20 years, but its average age of cars on Australia’s roads is 10.1
than ICE sales. EV sales grew. And the rest of the world is years (about 11 years in the US), and the sheer
catching up. China’s share of the EV market number of such vehicles is huge.
This marks a massive shift from today’s will fall from 50 to 25 percent by 2040, with
market, which saw ICE vehicles account for 85
UK DEALERSHIPS TO NEED EV ACCREDITATION
A
new UK government-backed scheme when buying an alternatively-fuelled vehicle as Following a pilot scheme that ran from
will give an official stamp of approval opposed to petrol or diesel cars. November 2018 to February 2019, in which
to dealerships that are skilled in selling the EV skills of 12 dealerships were audited, it
and servicing electric vehicles (EVs). As a result, retailers need to be able to answer is already estimated there will be 130 electric
all the questions customers may have, explain vehicle approved sites across the UK by the
The ‘Electric Vehicle Approved’ brand aims to the benefits of owning an EV, clarify any end of 2019.
create a trusted brand and promote Dealers possible confusion and, in addition, that
that have been approved to crack down on servicing an electric car requires a different Future of Mobility Minister, Jesse Norman,
poor advice and increase the confidence of level of specialisation and training. said, “Record levels of ultra-low emission
drivers looking to buy EVs. vehicles on our roads are good news as we seek
The standard for EV Dealer accreditation – to end the sale of new conventional diesel and
Many consumers are said to find buying a developed by the National Franchised Dealers petrol cars and vans by 2040.
plug-in car more complex than purchasing an Association (NFDA) and the Energy Saving
internal combustion engine vehicle; they need Trust – will also encourage car Dealers to “The accreditation recognises businesses with
to consider different elements – such as battery develop their expertise in servicing EVs as the knowledge, capability and commitment to
range and the availability of charging points – UK moves towards a zero-emission future. electric vehicles and will help encourage more
car owners to switch to a greener alternative.”
automotivedealer.com.au | JULY 2019 | 15FEATURES Australian Automotive Dealer Association
NADA Study
Tour 2020
LAS VEGAS February 13-17
BOOK NOW FOR NADA 2020
B
ookings are open now for the 2020 dealership industry Expo and a tour of a • DMS and CRM Providers
AADA Study Tour to the NADA leading Las Vegas dealership. • Facility Design/Improvement/
Show in Las Vegas. The AADA Study Furnishings
Tour is a premium tour package featuring You can access all of this for just AU$2,999 per
person, twin share, or AU$3,799 per person • Finance and Insurance
not just one of the world’s largest business
conventions but a massive Expo, visits to for a private room.* • Parts, Service, Body Shop
US dealerships, the International Industry • Remarketing
The NADA Show attracts more than 22,000
Relations Dinner, Australia Party networking • Social Media/Communication
attendees made up of auto retailers, OEMs
function and the opportunity to see the sights
and allied industry executives. More than • Training and Education
in one of the world’s most exciting cities.
10,000 dealerships are represented. They come • Vehicle Inventory Software/Valuation
Taking place from February 13 to 17, together to hear the latest insights, analysis and
• Vehicle OEMs
the NADA Show is the industry's largest strategies for the future of automotive retailing.
Topics covered include Dealer operations, • Vehicle Reconditioning
marketplace of automotive and dealership
products and technologies. Global automotive marketing and digital strategy, personnel • Website Hosting and Strategies.
leaders rub shoulders with everyday Dealers, management and the latest automotive
OEM representatives and allied industry regulations and legislation. Show attendees Combine that with unrivalled networking
professionals. get the most up-to-date information on data opportunities, international visitors, world-
management, EVs and OEM relations directly, class speakers and an incredible social
The AADA Study Tour is always a popular from NADA’s own Academy instructors and program, and you begin to understand why
ticket and 2020 promises to be even more industry experts. the AADA Study Tour to NADA is a must
so, with the lowest prices we have ever for any Dealer serious about putting their
offered. The full Study Tour experience, The incredible NADA Expo fills the Las Vegas dealership at the cutting-edge of our industry.
from 13 to 17 February, includes four nights’ Convention Center, with over 500 exhibitors
accommodation at the world-famous Caesar’s taking up more than 650,000 square feet Register online at aadastudytours.com.au
Palace Hotel & Casino, entry to the AADA of exhibit space. Products and services are and prepare to reboot your mind on what is
Gumtree International Industry Relations available in the following categories: possible for your dealership now and into the
Dinner featuring 2019 NADA Chairman, future.
• Advertising/Marketing/Promotion
Charlie Gilchrist, the exclusive AADA Carsales • Aftermarket/Accessories *Price based on .69 US/AU exchange rates as at
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Dealer registration, the world’s biggest auto
16 | JULY 2019 | automotivedealer.com.auFEATURES Australian Automotive Dealer Association
MORE AUSSIES PLAN TO FINANCE AT
DEALERSHIP, BUT ONLINE THREAT IS REAL
T
he second annual FICO survey on
automotive financing has revealed that
35 percent of Australian consumers
plan to find their next auto loan at a dealer, up
by 14 percent from last year.
Another 35 percent plan to look online for
their next car loan, which is down by 7 percent
since 2017.
Silicon Valley analytic software firm FICO’s
second annual global survey on consumers’
automotive finance experience also revealed a The survey revealed selling of add-on “Car loans are still being underwritten using a
6 percent decline in visiting a bank/lender. insurance was way down. Last year 64 percent very manual process”, Mr Swyny said.
of car buyers said they were offered auto
The survey was conducted before the Hayne insurance as part of their financing experience, “One way the banks and dealerships can fight
Royal Commission into Banking was but that fell to 38 percent this year. back against online competition is to automate
completed. the back end systems to improve the customer
FICO’s survey found that 84 percent of experience.”
“This trend looks like good news for Australians initiated their financing discussion,
dealerships and puts Australian consumers as opposed to responding to an offer. In The survey showed that, in Australia, 67
more in line with North America and parts of addition, 67 percent said they felt in control percent of consumers had to wait more than
Europe, where the preference for the Dealer of the automotive financing process. Just over 30 minutes to complete their loan transactions.
channel is strong,” said Paul Swyny, FICO half (52 percent) considered one lender the Globally, 30 percent of respondents felt they
Australia client partner. last time they secured a loan, while 43 percent had to wait too long to complete the financing
considered two or more lenders, yet almost process. A similar number of Australians, 31
“However, the research, which was conducted half of those who plan to go online for their percent, said they would be open to instant,
part way through the Australian Banking next round of automotive financing said they pre-qualified offers to improve expediency
Royal Commission, may not be reflective of want to comparison shop. and avoid dealing with a bank or doing extra
current sentiment. The banks were already paperwork. Only 14 percent said they wouldn’t
taking a reputational hit in the media, but the “Consumers are taking greater control of the be open to an instant loan offer, with a further
commission was only critical of Dealer lending auto financing process, so banks, dealerships 56 percent in the ‘Maybe’ category.
later in the piece.” and other lenders have an opportunity to
leverage technology and data to recognise “In the future, offers and approvals will be
The Hayne Royal Commission denounced pre-purchase behaviour signals and identify increasingly automated, based on credit scores
the use of flex commissions, which have since Australians likely to be in the market for a and fraud risk analysis,” Mr Swyny said.
been banned. vehicle, and then initiate personalised offers,”
“We expect more loan providers will employ
“But thanks to this and other findings of the Mr Swyny said.
technology solutions that will assist to
Hayne report, dealerships likely have some Mr Swyny said the market is ripe for change, rapidly generate optimised loan offers and
work to do to maintain the ground they’d with competition in the finance space growing automatically offer them to the consumer,
gained since last year’s automotive financing thanks to the rise of online competitors. offering choice and the ability to comparison
study,” Mr Swyny said. We’re seeing this shift across the Tasman, shop.”
When asked about how good a deal they felt with 44 percent of New Zealand consumers
FICO’s independent research surveyed
they received on their most recent car loan, ranking online financing as their first choice
2,000 adult consumers across nine countries
31 percent of respondents said they got an for their next loan, up 4 percent on last year.
including the US, Canada, Mexico, Chile,
excellent deal and 59 percent said they got New Zealanders surveyed cited convenience,
Australia, New Zealand, Germany, Spain and
a good deal. Only 8 percent said they got a comparison shopping across lenders and speed
the UK. Respondents were those between the
poor deal and just 2 percent felt they had been as their main reasons for shopping for finance
ages of 18-64 who acquired a loan on a new or
swindled. online.
used vehicle within the last three years.
automotivedealer.com.au | JULY 2019 | 17MOTORSPORT Australian Automotive Dealer Association
NEW TOURING CAR SERIES: IS THIS THE
START OF SOMETHING BIG OR SMALL FOR
AUSTRALIAN MOTOR SPORT?
MB: It is somewhat of a mixed bag, but JC: Have the 16-18 cars that have come into
certainly Hyundai are a standout, as are Australia all been previously raced overseas?
Audi and Honda, either directly with the
John Crennan manufacturers or their Dealer Councils.
MB: No, 90 percent of the cars are brand new
Motorsport Contributor and not previously raced.
JC: Turning now to Australia, how is your
JC: How is the relationship between TCR
relationship with global TCR Headquarters
Australia and the Team’s governed? Is it like
governed?
J
Supercars, with a franchise agreement?
ohn Crennan throws TCR Managing
MB: We operate with a licence agreement and
Director, Matt Braid, 21 questions a few MB: No, it is not a franchise deal.
the term is a lengthy one.
days prior to being handed the keys to a
JC: How demanding are your criteria for
new door in Australian motor sport. JC: I understand in Australia the TCR Global
appointing teams? Is there a formal application
Agreement is with ARC (Australian Racing
JC: Where are the global headquarters of TCR process?
Group). Who and what are they?
(Touring Car Racing)?
MB: There are no set, specific criteria; however,
MB: ARC is a privately held entity with three
MB: The principal offices are in England we want all TCR Australia teams to be
owners and directors: me, former CEO of
and Italy. The series is owned by the ‘World professionally presented, self-sufficient, and to
Wilson Security, John McMullen, and a third
Sporting Consultants’. The series is the share our vision of offering a first-class product
party who wishes to remain private.
brainchild of former World Touring Car on and off the track.
Championship Manager, Marcello Lotti, who JC: What benefits did the TCR Licencing
JC: Do any of the owners/directors have any
continues to be the driving force. Agreement bring to ARC to assist and facilitate
direct or indirect financial interest in any of the
the best possible start-up phase?
JC: How long has TCR been operating and teams?
in which regions prior to this expansion into MB: The start-up support has been outstanding
MB: No
Australia? with things such as databases and templates for
both the technical and commercial operational JC: Whilst your selection of Aaron Noonan and
MB: Marcello Lotti established it in 2014, so
disciplines and start-up experiences in other Greg Rust as your commentary team is a strong
this will be its sixth season. There are four
countries. It will be a two-way street, however, move, all top sports broadcasts these days have
internationally sanctioned series globally,
as TCR Global have been impressed with a big name who has deep understanding of the
with 12 regional series, primarily throughout
many of our own early initiatives and are most sport from the inside and top class experience
Europe, working to the TCR regulations.
interested in what learnings they can glean ‘behind the wheel’. Any plans on this?
JC: I noted in an article that TCR don’t allow from the Australian series.
MB: Everyone will be pleasantly surprised with
fully-fledged factory/manufacturer support.
JC: How many brands do you currently have our television format where it will take on a
What then is the level of support permitted by
over the line? very entertaining, concise, Big Bash theme,
manufacturers?
with Saturday’s telecast qualifying and race
MB: We currently have eight brands committed
MB: The crucial ethos of TCR is cost- format airing for an hour, from 2pm–3pm, and
of the 14 brands that are internationally
effectiveness, ensuring a level playing field for Sunday for two hours, 2pm–4pm.
homologated. (These eight are) Audi, Alfa,
everyone and not disadvantaging any teams
Hyundai, Honda, VW, Opel, Subaru and JC: Do you have a primary/naming rights
or brands. TCR do not allow a manufacturer
Renault. We also have a lot of work in progress sponsor and how has the appetite been from
to own a team or a car; however, they are free
in attracting more brands to the series. sponsors for this new series?
to provide sponsorship dollars or in-kind
support within the normal parameters of sports JC: I understand the series owns the cars. Is this MB: We will be announcing our naming rights
sponsorship. correct? sponsor on the Friday just prior to the race
weekend (this interview was conducted earlier
JC: With the established overseas operations MB: No. The teams own most of the cars and
in May; the series naming rights sponsor has
have there been any manufacturers who stand those that don’t have a buyback/lease program
since been revealed to be carsales). What we are
out in terms of the way they have embraced in place.
finding with the sponsor market is enthusiasm
TCR?
and interest because our business model is far
18 | JULY 2019 | automotivedealer.com.auYou can also read
