AADA GATHERS FRANCHISE CODE INTEL AT NADA

As we move towards adoption of the Automotive Code of Conduct, AADA took the opportunity, during our Study Tour of the National Automobile Dealers Association (NADA) Convention in January, to pick the brains of our colleagues from the US, the UK and Europe.

Over the next few months AADA will consult with both sides of politics to develop a Dealer-specific Franchise Code, so we felt it pertinent and responsible to arm ourselves with the best information from our friends overseas who already have such systems in place or are exploring the possibility of introducing their own versions.

At the September 2018 AADA National Dealer Convention and Expo, the Labor Party committed to a Code of Conduct – a commitment the Coalition matched prior to Christmas.

During NADA 2019, AADA held a series of meetings with our international friends in San Francisco, picking up vital background information that will assist us in negotiating the formation of the code.

The consultations gave AADA important insights into how such codes work in other markets, while UK and European Dealers were interested in Australia’s potential code.
AADA CEO, David Blackhall, and officials held a series of highly productive meetings with NADA CEO, Peter Welsh, and his legal director, Andy Koblenz.

They also met with senior leaders of the California New Car Dealers Association (CNCDA), Alisa Reinhardt and Anthony Bento, who are in the process of negotiating legislation eradicating some of the more problematic practices some OEM importers in Australia undertake.

Having unanimously passed the Californian legislature, the bill was vetoed by then-Governor Jerry Brown because he was concerned that the requirement for manufacturers to pay Dealers retail rates for warranty work would raise the price of repairs for car owners.

That should not be the case, because the cost of warranty is a cost to the OEM rather than the retail customer; however OEMs in some states have added ‘a warranty retail rate recoupment charge’ to retail warranty rates. Other states have added a recoupment ban clause to their automotive franchise laws to prevent this.

California Dealers are confident the bill will pass again and be approved by new Governor, Gavin Newsom.

Other information AADA learned included the knowledge that some US states have enacted 10-year moratoria preventing repeat demands for capital expenditure on dealership facilities.

Other valuable clauses of franchise codes included a ban on OEMs installing another dealership within 10 miles (16.1km) of an existing store, and an appeals process that allows Dealers to appeal to a government-appointed, low-cost tribunal should OEMs try to dismiss or not renew a Dealer’s franchise agreement.

AADA also spent time with dealer association leaders from other US states, plus those from India, Canada, Italy and Brazil. We have learned a lot from these meetings and we will be incorporating this into our thinking as we move forward to the Automotive Code discussions this year.

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