Australian buyers and car dealers to be protected under proposed consumer law changes

Automotive dealers could benefit to proposed changes to the Australian Consumer Law, with a larger onus set to be put on the manufacturers.

The aim of the changes, currently under consultation by the Treasury, is to make it easier for buyers to get help if their car is faulty, and to shift repair or replacement costs from the dealer to the manufacturer.

The Government says updating the law will both give more power to consumers to get compensation from dealers who fail to provide a remedy in the event of product issues, while also punishing manufacturers which don't reimburse their dealers when things go wrong.

4

"The consumer guarantees are automatic statutory warranties that ensure consumers can seek a refund, repair, or replacement when there is a problem with something they buy," said Assistant Treasurer Michael Sukkar.

"For example, the consumer guarantees require products to be of acceptable quality, fit for purpose and match their description.

"Consumers often face difficulties in obtaining a refund, repair, or replacement because there is currently no penalty for suppliers who refuse to provide a remedy.

"The options being consulted on would provide stronger incentives for businesses to comply with their obligations under the Australian Consumer Law and make it easier for consumers to obtain a remedy."

4

Australian Automotive Dealers Association (AADA) CEO James Voortman said the organisation supports the proposed changes, saying the middle man is often affected the most when remedy is required.

"New car dealers are very much focused on providing their customers with a first-class experience and we welcome the Government’s efforts in trying to ensure compliance with consumer guarantees,” said Voortman.

"It is encouraging that the regulation impact statement has identified options to strengthen supplier indemnification. The ACCC’s market study into the new car industry highlighted the issue of manufacturers not indemnifying their dealers.

"Too often dealers, which are the suppliers under the ACL, are the meat in the sandwich caught between the customer and the manufacturer of the vehicle when there is a request for a remedy.

"Motor vehicles are a high value purchase and require ongoing maintenance which is often conducted through the dealer network. Dealers often suffer significant financial loss by replacing or refunding a vehicle only to be told they will not be indemnified."

4

Car dealer and new car buyers at dealership

The Federal Chamber of Automotive Industries (FCAI) however, believes there are already strong provisions in place – although it isn't against taking these further and is evaluating its own response.

"We acknowledge the Federal Government’s announcement that it will consider future steps that might be necessary regarding consumer guarantee and supplier indemnification provisions," said a spokesperson.

"And we support appropriate actions from governments to protect the rights of consumers in Australia. In this regard, Australia already has significant provisions in place under Australian Consumer Law to support and protect customers.

"We will work with our members to consider the review being undertaken by the Treasury and appropriate next steps."

The consultation process between Treasury and stakeholders will be open for the next 60 days, closing on February 11, 2022.