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ACCC blasts new-car industry

Scathing: ACCC chairman Rod Sims says his organisation will work with the new-car industry to correct problems raised in its study of industry practices.

Consumer watchdog sees ‘urgent need’ to address widespread issues in car industry

10 Aug 2017

THE Australian Competition and Consumer Commission (ACCC) today launched a blistering attack on the new-car retailing industry, accusing car manufacturers of stymieing customer complaints, obstructing sharing of technical information with independent repairers to protect their own highly profitable dealer service system and providing inaccurate fuel consumption estimates for new cars.

The accusations by the federal government’s independent watchdog are contained in a 145-page draft report of its study into the Australian motor industry and its retail practices. It is seeking feedback on the document by September 7 before compiling the final report by the end of the year.

It is also proposing to hold a roundtable discussion with invited stakeholders next month towards its goal of negotiating reforms based on dozens of recommendations made in the draft report.

ACCC chairman Rod Sims said complaints to the ACCC about new-car manufacturers had risen to more than 10,000 over the past two years.

“Our draft report highlights the urgent need to address widespread issues in the industry,” he said.

Mr Sims said the ACCC was deeply concerned about the level of non-compliance with the Australian Consumer Law in the new-car industry.

The organisation recently took GM Holden to task over its customer responses, forcing widespread changes to the company’s policies and systems.

It is also taking Federal Court action over various issues against Ford, Volkswagen and Audi.

“We will continue to take action to address failures by car manufacturers and retailers to provide the remedies to which consumers are entitled,” Mr Sims said.

The ACCC found that many car manufacturers had not factored consumer guarantee rights into their complaint-handling systems.

“These rights provide remedies for consumers if their new car experiences a failure, including a right to a repair (without charge) for a minor failure, or a replacement of the car or a full refund for a major failure,” the ACCC says.

The consumer watchdog said it was also concerned about logbooks and service manual statements that were likely to mislead new-car buyers about their consumer guarantees when it comes to servicing and repairing their car.

The ACCC has also taken the industry to task for barriers preventing access by independent repairers to technical information necessary to repair and service new cars, despite a voluntary commitment to supply such information in 2014.

It says the repair and servicing sector was worth $24.8 billion in 2016-17, with dealers earning an average 64 per cent profit margin on new cars they serviced.

“Car manufacturers should be required to share new cars’ technical information with independent repairers,” Mr Sims said.

“For new cars to be properly repaired and serviced, independent repairers need access to electronic information and data produced by car manufacturers.

“This lack of competition hurts new-car buyers who have fewer options to get the best deal for repairs and servicing, and restricts independent repairers from competing on a level playing field.”

The ACCC also found that consumers are not receiving accurate information about the fuel consumption or emissions performance of new cars.

“Fuel consumption and emissions are often major purchasing factors for buyers when choosing their new car,” Mr Sims said. “We’re concerned that what new-car buyers are told their car will achieve is very different from practice.”

The ACCC quoted Australian Automobile Association (AAA) research that found real-world fuel consumption was on average 25 per cent higher than official laboratory test results that are provided on mandatory vehicle labels.

“Car manufacturers and dealers must ensure the representations to consumers about fuel consumption and emissions are accurate and appropriately qualified,” Mr Sims aid.

“We also support introducing more realistic laboratory tests and an on-road ‘real driving emissions’ test to give people more accurate information before they buy.”

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