These are three key findings in the Australian Competition and Consumer Commission's (ACCC) draft report into the new car retailing industry, which is open for stakeholder comments until September 7. The ACCC expects to release a final report in late 2017.
It has been more than 12 months since the plan for a report was first announced.
Among the recommendations: the ACCC said it wanted customers to get a refund or replacement within a set period of time if their new car doesn’t work, and for a string of minor issues to constitute a major one.
“Complaints to the ACCC about new car manufacturers have risen to more than 10,000 over the past two years," said ACCC chairman Rod Sims.
"Our draft report highlights the urgent need to address widespread issues in the industry.”
The draft report's publication comes after the ACCC launched a string of consumer law cases against numerous manufacturers in the motor vehicle industry, including the VW Group over its diesel emissions, Ford over its Powershift gearbox recalls and Holden about its response to a manufacturing fault.
The headline of today's statement? "New car industry put on notice".
Consumer law compliance concerns
“The ACCC is deeply concerned about the level of non-compliance with the Australian Consumer Law in the new car industry. We will continue to take action to address failures by car manufacturers and retailers to provide the remedies to which consumers are entitled,” Sims said.
In its statement this week, the organisation alleged that many car makers had not factored consumer guarantee rights into their complaints 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... and new car buyers are losing out as a result," it said.
The ACCC believes that car makers focus too much on warranty obligations and exclude their consumer guarantee obligations; and slams a ‘culture of repair’ underpinning car manufacturers’ systems and policies for dealing with car defects and failures.
The ACCC also cites what it considers the widespread use of non-disclosure agreements by car manufacturers when resolving complaints; the lack of effective independent dispute resolution options for consumers, and particular features of the commercial arrangements between car manufacturers and dealers.
It alleges: "One woman reported to the ACCC she was having transmission problems with her car. When she took it back to the dealer to try and enforce her consumer rights, she was blamed for the problem and advised to drive 'more like a man'."
“We will work with car manufacturers and dealers to develop easy guidelines which should be provided to consumers when they buy a new car so they are better informed," Sims said.
The ACCC is also concerned about other potential consumer law compliance issues in the new car retailing industry, citing statements provided in logbooks and service manuals prepared by some car manufacturers that are "likely to mislead new car buyers about their consumer guarantee". Strong words...
This is a longstanding issue. Aftermarket repairers have long called for OEMs to give them access to technical data so they can repair cars. Car makers of course want to keep the data in-house so people go to their franchise dealers, which are their major profit centres.
The ACCC says it found problems with the "detail and timeliness of technical information given to independent repairers", despite a voluntary commitment made by car manufacturers in 2014 to provide independent repairers with the same information to repair and service new cars that they provide to their authorised dealers.
"There are barriers in the industry preventing access to this technical information, which impacts competition in the repair and servicing of new cars," it said.
The ACCC also claims that the repair and servicing sector was worth a combined $24.8 billion in 2016-17 and dealers have an average 64 per cent profit margin on new cars they service. This latter figure seems extraordinarily high.
“Car manufacturers should be required to share new cars’ technical information with independent repairers. For new cars to be properly repaired and serviced, independent repairers need access to electronic information and data produced by car manufacturers,” Sims said.
“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.”
Fuel consumption/emissions figures
The ACCC believes consumers are not receiving accurate information about the fuel consumption or emissions performance of new cars, citing existing and contested research from the Australian Automobile Association that indicates real-world fuel consumption is on average 25 per cent higher than official laboratory test results.
“We’re concerned that what new car buyers are told their car will achieve is very different from practice,” Sims said.
“Car manufacturers and dealers must ensure the representations to consumers about fuel consumption and emissions are accurate and appropriately qualified. 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."
We've asked various car manufacturers for comment on some of the findings and will do a follow-up report looking at the other side of the argument next week.