Australia: New car retail industry on notice: ACCC releases final report

Australian car dealers and importers will need to upgrade their consumer law compliance to avoid ACCC investigations particularly in the areas of consumer warranty rights; vehicle emission claims and access for independent repairers to vehicle software and technical data.

Having sounded the warning bells in its draft report in August and continued to ramp up its enforcement actions within the retail vehicle sector, the ACCC's final recommendations from its new vehicle retailing industry market study clearly identify both Australian Consumer Law and competition law compliance deficiencies that are likely to form the basis of future enforcement actions, in particular against manufacturers, unless changes are made to what are currently standard industry practices.

Top of the New Year's "to do" list for Original Equipment Manufacturers (OEMs) in Australia should therefore be a review of internal policies and procedures, commercial arrangements with dealers and supply and technology access arrangements with authorised and independent repairers.

In particular, they will need to give careful thought to risks concerning:

  • misleading consumers and dealers as to the operation of the consumer guarantee provisions (both in terms of remedies available to consumers and rights of indemnification for dealers),
  • unfair contract terms for dealers; and
  • how OEMs' conduct and policies may impact the ability of independent repairers to compete in the market.

The ACCC's key findings at a glance

The ACCC's final report on its new vehicle retailing industry market study, published on 14 December 2017, is the culmination of about 18 months of investigation. The scope of the final report included:

  • activities that occur prior to sale, such as the advertising of new vehicles and representations made about vehicle performance or emissions;
  • activities that occur at the time of sale, including the sale of finance and insurance products, representations on standard manufacturer warranties, and the sale of additional warranties; and
  • post-sale activities, such as regular maintenance and the cost of spare parts for the new vehicle.

The ACCC considers that changes to the new vehicle retailing practices are required and has recommended changes in the following area:

  • consumer rights: consumers receive a refund or replacement (ie. a current "major failure" remedy) without needing to prove a "major failure" in cases where the failure occurs within a short time (eg. 30 days),
  • "lemon laws": multiple non-major vehicles faults or failures can amount to a major failure;
  • extended warranty clamp down: better disclosure when selling extended warranties;
  • dealer indemnities: manufacturers update their dealer agreements to reflect their obligations to indemnify the dealer for consumer defect claims under section 274 of the ACL and ensure these arrangements do not contain unfair contract terms;
  • dealer franchise agreements: the imbalance of power between dealers and manufacturers in commercial arrangements be the subject of further examination;
  • data sharing: a mandatory scheme be established to make it compulsory for vehicle manufacturers to share technical information with independent repairers;
  • original equipment (OE) manufacturer-branded parts be available to independent repairers unless the manufacturer publicly states that the part is subject to restricted access on security-related grounds;
  • emission claims: new vehicle buyers have more accurate information about their vehicles' fuel consumption and emissions by requiring new fuel consumption and emissions labels to be fixed to new vehicles and through the adoption of real world testing of new vehicles; and
  • consumer data: the Australian Government introduce a Consumer Data Right into the new car retail industry to deal with a range of new technology issues such as in-vehicle Telematics.

Below, we examine three of the more significant issues on which the ACCC has focused in particular in announcing its findings.

Consumer warranty rights and Commercial arrangements between manufacturers and dealers

Throughout the course of its investigation, the ACCC reviewed a number of dealer agreements. These agreements contain the terms which govern the relationship between vehicle manufacturers and dealers. The ACCC made the following observations:

  • dealers often respond to consumer guarantee claims using the framework of the policies and procedures put in place by manufacturers;
  • dealer agreements can make it contractually difficult for dealers deviate from the policies and procedures put in place by manufacturers. Systemic problems can arise when these policies and procedures promote a framework which does not adequately protect consumer rights; and
  • some manufacturers impose complicated warranty claim processes, making it uncommercial in some cases for dealers to provide repairs or remedies to consumers.

Under the Australian Consumer Law, dealers are responsible for providing consumer law remedies. However, they also can recover the reasonable costs of providing these remedies to consumers from vehicle manufacturers when the issue is the manufacturer's fault. For example, if a new vehicle suffers a major failure from production line faults, dealers can recover costs from manufacturers for complying with their obligations under the Australian Consumer Law to provide affected consumers with appropriate remedies (refund, repair or replacement, depending on the circumstances).

The ACCC has indicated that it will commence an investigation if it becomes aware that any particular manufacturer has prevented a dealer from discharging its obligations under the Australian Consumer Law. This is likely to include where manufacturers make it overly difficult for dealers to recover their costs from manufacturers.

Indeed, the ACCC has already increased its enforcement actions in this area, having commenced proceedings against Ford Australia in July 2017 for allegedly engaging in unconscionable and misleading and deceptive conduct, and making false or misleading representations, when responding to consumer complaints about apparently systemic transmission issues. The ACCC also accepted court enforceable undertakings from Holden in August 2017 to address concerns about how Holden had been conveying and potentially misconstruing consumers' rights under the Australian Consumer Law.

If you are a vehicle manufacturer, now is the time to review your dealer agreement and warranty policies to ensure that they do not mislead dealers and consumers about the concurrent operation of the consumer guarantee regime of the Australian Consumer Law.

Sharing of technical information with Repairers

The ACCC is concerned that independent repairers have had problems accessing the technical information required to repair and service new vehicles.

To rectify this issue, the ACCC has recommended that a mandatory scheme be implemented through legislation which would require vehicle manufacturers to share their technical information with independent repairers. This scheme would facilitate the sharing of technical information on commercially fair and reasonable terms, and implement safeguards to protect environmental, safety and security-related information.

This is not something the ACCC is able to implement on its own. It will be interesting to see whether the sitting Government responds to the ACCC's recommendation and, if it does, how.

Fuel consumption and emissions claims

The ACCC has called upon the Australian Government to introduce new vehicle labels which feature "a star-rating system or annual operating costs." This is an attempt to minimise the extent to which consumers interpret an "absolute" fuel consumption/emissions value as equivalent to what they would achieve in real-world driving conditions.

The ACCC has also recommended that the Government introduce realistic laboratory tests for new vehicle fuel consumption and emissions, including on road "real driving" tests to give new vehicle buyers more accurate information.

This recommendation is made following the ACCC's receipt of the Australian Automotive Association's finding that actual fuel consumption can be up to 23% higher on the road when compared to tests performed in the laboratory.

One of the reasons why the ACCC wants on-road testing of new vehicles is because it believes that one third of new vehicle purchasers regard fuel consumption as the most significant factor influencing purchase after price and model of vehicle.

The ACCC's recommendation is similar to real world emissions testing models being proposed in Europe. At the moment, new vehicles are typically not tested in Australia and are, instead, generally tested at the place of their manufacture. For example, if a vehicle is manufactured in Germany, the Australian Government relies on the testing performed by the relevant German authorities. It is therefore unclear at this point how receptive the Australian Government would be to implementing a domestic testing regime for new vehicles and what that might look like.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions