AADA 2019 NATIONAL DEALER CONVENTION & EXPO FEATURE: WHAT WILL AN AUTOMOTIVE CODE MEAN FOR YOU?

After a long campaign for an industry-specific Automotive Code of Conduct, both sides of politics last year agreed to introduce one.

The ‘one size fits all’ Franchising Code that covers everything from Jim’s Mowing to 7-Eleven has never suited the automotive industry. Vehicle manufacturers have had all the power in negotiations, and most Dealers have not been covered by the ‘unfair contract’ provisions in the Australian Consumer Law.

The extent of the imbalance of power between motor vehicle manufacturers and motor vehicle Dealers has left Dealers highly vulnerable to some manufacturers’ demands, given the scale of the investment Dealers make in acquiring, maintaining and growing their businesses.

The need for a specific industry code in the retail new motor vehicle industry is not to make Dealers and manufacturers ‘equal’. It is also not to address conduct that might be considered unconscionable or lacking in good faith. There are already existing laws that address unconscionable conduct and conduct lacking in good faith. The fact that such laws exist, yet Dealers are still being ‘legally’ exploited, reinforces the need for a Dealer-specific industry code.

The purpose of a specific industry code is to create minimum standards of conduct that:

  • are binding on manufacturers and Dealers
  • are simple to regulate and enforce
  • restore Dealers’ confidence in investing in their dealerships, notwithstanding the highly competitive market for vehicle sales and the dynamic nature of the market itself
  • eliminate specific exploitative behaviours of manufacturers that are too easily facilitated within the current regulatory framework, and
  • protect consumers.

In this session David Blackhall will host a panel of industry experts to discuss what an Automotive Code might look like and what the ramifications will be for Dealers.

David will be joined by:

Maria Townsend, HWL Ebsworth Lawyers

Maria is a highly-experienced corporate and commercial lawyer specialising in the automotive industry for more than 20 years. She provides advice to major automotive Dealers and Dealer councils across Australia on various operational legal issues, corporate compliance, restructures and business succession. In particular, Maria is one of the most experienced and sought-after legal advisors on sales and acquisitions of dealerships, businesses and properties, refinances and negotiations with lenders and OEMs.

Andy Koblenz, NADA

Andy is NADA’s Executive Vice President of Legal and Regulatory Affairs, and General Counsel. He supervises a staff of attorneys who specialise in franchise and state law, corporate law and federal regulatory affairs.

Prior to his current position, Andy was Vice President of NADA Industry Affairs from June 2001 to February 2006, directing the activities of NADA’s Industry Relations and Industry Analysis departments as well as the association’s American Truck Dealers (ATD) division.

Previously he served for two years as NADA’s Executive Director and Special Counsel for Industry Affairs, representing the interests of franchised automobile Dealers in policy, operational and other discussions with vehicle manufacturers.

Evan Stents, Lead Partner, HWL Ebsworth Lawyers

Evan is considered one of the leading automotive industry lawyers in Australia. He has acted for OEMs, component producers, automotive service providers, automotive Dealers, automotive after-market suppliers and a number of automotive industry group associations.

Evan regularly speaks at industry conferences and writes in industry journals. In recent times Evan has also been a strong advocate for an automotive industry code protecting the rights and interests of automotive Dealers.

James Sturgess, Macpherson Kelly

James’ commercial acumen is regularly called upon in major acquisitions, mediations, disputes, planning and strategy by clients and within the firm.

James’ experience with motor Dealers is deep and broad, particularly in the Melbourne Metro area. James also has wide experience working closely with Managing Directors and senior management regarding their duties, strategy and performance in their business.

James grew up in Dealer land. The first six years of his life were literally spent in a small country dealership in rural Victoria, where the family home was the dealership premises. His father was a Holden, BMW and SAAB Dealer over several decades and served on the Holden Dealer Council during the 70s and 80s.

This expert panel will discuss what an ideal ‘Dealer Code’ would look like, including minimum standards of conduct, minimum tenure periods including a renewal option commensurate with the level of investment required in the particular dealership and renewal options.

Other issues include protocol for the termination of Dealer agreements, such as a requirement for manufacturers to buy back, at the Dealer’s cost price, Dealers’ inventory of new and demonstrator vehicles, parts and tools required to have been purchased by Dealers.

An Automotive Code would hopefully prohibit manufacturers from requiring, encouraging or facilitating Dealers to engage in ‘pre-retail’ or ‘cyber car’ sales reporting; prohibit manufacturers from terminating Dealers for failing to meet performance targets which are unrealistic given manufacturers’ market shares, and prohibit manufacturers from unilaterally varying the terms of their Dealer agreements.

There is a huge range of these matters to cover to ensure Dealers get the Franchise Code they deserve. This affects every franchised automotive Dealer in the country, so you don’t want to miss what will be an incredibly informative and thought-provoking session.

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