Consumer watchdog slams ‘culture of repair’ for new-car faults

AUSTRALIA’S consumer watchdog has put the new-car industry on notice after slamming a “culture of repair” that has left owners saddled with chronically faulty vehicles.

The Australian Competition and Consumer Commission has today released a draft report into the new-car industry in the wake of two separate court cases aimed at helping new-car buyers that were sold faulty vehicles despite being protected under consumer laws.

The first, against Holden, has resulted in the car maker agreeing to the better treatment of customers who experienced multiple faults with their vehicles within 60 days of buying them. The second, against Ford Australia and its handling of faulty Powershift transmissions, is still before the courts.

“There is a dominant ‘culture of repair’ underpinning manufacturers’ systems and policies for dealing with car defects and failures, even where cars have known and systemic mechanical failures which would entitle a consumer to a replacement or refund under the consumer guarantees,” the ACCC’s draft report says.

“The widespread use of non-disclosure agreements when resolving consumer complaints suggests that consumers are not entitled to their consumer guarantee and warranty rights unless a non-disclosure agreement is signed when this is not the case.

“Nondisclosure agreements also substantially reduce information in the marketplace for new buyers about defects and safety issues that are common to a particular car,” it said.

However, it won’t be just the car brands that are likely to feel the ACCC’s increased scrutiny. The watchdog said it would also potentially go after dealerships.

“Manufacturers’ complaints handling systems, policies and practices that do not comply with the consumer guarantee requirements of the Australian Consumer Law will continue to be targeted through action by the ACCC and fair trading agencies, including enforcement action where appropriate,” it said.

“Such action may also address any instances of non-compliance by dealers. The ACCC is particularly concerned about manufacturers and dealers engaging in conduct that may be misleading or unconscionable.”

According to the ACCC, the commercial relationships between dealers and manufacturers, and the need to safeguard their financial positions, “can have the effect of denying or making it difficult for consumers to readily access the remedies to which they are entitled”.

The Federal Chamber of Automotive Industries, a united voice for almost all the car companies that sell vehicles in Australia, said it looked forward to working with the ACCC to "provide more information about the complex matters raised in the draft report".

"The industry strives to deliver the best outcomes for its customers through offering world-class technology, safety, value and service to Australian consumers; a commitment which is underpinned by both consumer law and the manufacturers’ warranty and support mechanisms," it said.

The ACCC’s draft report also questions the way that new cars are given fuel use ratings in Australia, and called for a review of the laboratory bench test – the current way a new car’s fuel use and emissions levels are set – to be revised to more accurately reflect real-world figures, the ones that buyers see. On average, real-world fuel use is about 20 percent higher than the official figures that new cars show on their windscreen.

As well, it will look at claims that the car maker’s restricted access to the information and data required to repair and service new cars is locking out independent servicing businesses.

The ACCC is inviting public comment on the draft report until September 7. The final report is expected to be released late this year.