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ACCC report criticises car industry

Tony Weber, chief executive of the Federal Chamber of Automotive Industries.

The Federal Chamber of Automotive Industries, (FCAI) has expressed concern regarding the ACCC’s final report into the Australian new car retailing industry.

The FCAI’s Chief Executive Tony Weber said that the report has revealed both a poor understanding of the industry and insufficient evidence to support the claims. This is especially disappointing for the FCAI as the document took around 18 months to develop.

“While the FCAI and motor vehicle companies in Australia are still studying the detail of today’s report, at first blush it appears that the ACCC has taken 18 months to research and understand a complex industry, and failed to properly comprehend it,” Mr Weber said.

“The ACCC’s report appears to be predicated on a very small number of complaints which it uses to tarnish Australia’s $17.5 billion retail motor industry. This is not only unfair, it is inaccurate.”

“To take one example, the ACCC has relied on 85 consumer complaints and 229 small business comments to support its position on mandating unfettered access to service and repair information,” Mr Weber noted.

“By way of comparison, there are some 17 million motor vehicles on Australian roads today, which are predominantly repaired and serviced by the independent repair sector. So how does the ACCC hypothesize that the information isn’t readily available?

“Technical information to service and repair cars is already widely available and the FCAI’s Voluntary Code ensures that car companies will continue to offer the information necessary to service and repair cars available to independent repair sector. However, it appears organisations are seeking ways in which they can leverage car manufacturers’ intellectual property for their own commercial gain by building and selling aftermarket devices.”

Mr Weber noted that the retail new car industry also has been unfairly criticised by the ACCC, when in fact 1.178 million new motor vehicles were sold in Australia last year with overwhelming levels of customer satisfaction. 

“The reality is that as modern motor vehicles become more sophisticated, the independent repair sector needs to continue to adapt and change to ensure it remains relevant and up to date. Independent repairers shouldn’t be able to say they can repair all makes and models when clearly they can’t. Unfortunately, today’s report just smacks of the ACCC looking to support old and failing business models for independent repairers.”

“Car companies take safety, environmental and security information very seriously. Additionally, having security information in the public domain puts a vehicle at much greater risk of being stolen,” Mr Weber said.

The ACCC’s recommendation on information sharing goes against the advice of the National Motor Vehicle Theft Reduction Council (NMVTRC), which wrote to the ACCC specifically on the matter, stating:

“The current controls over the sharing of this information in Australia has helped deliver the nation low rates of electronic criminal manipulation by world standards and the NMVTRC’s view is that this approach should be maintained.”

“If the ACCC supports mandating the sharing of service and repair information above the already high level of information provided voluntarily by car companies, then the ACCC will own the responsibility for the misuse of that information,” Mr Weber said.

According to figures obtained from the UK Royal Automobile Club (RAC), the number of stolen vehicles in the UK has risen by nearly 30 per cent in the past three years, which is attributable in part to the release of security information.  By comparison, motor vehicle theft rates (all vehicles) in Australia have increased by 1 per cent over the same period.

“The ACCC has cherry-picked information to support its bias. Information provided to the FCAI by the ACCC on a confidential basis of complaints over a two-year period again reinforce the fact that the number of complaints are exceptionally small and most have been addressed by the car companies. Unfortunately, the ACCC has handcuffed us from releasing this information publicly.”






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Faulty airbag kills Australian man

A 2007 Honda CR-V, similar to the vehicle that crashed in Cabramatta.

A faulty Takata airbag is “likely” to blame for the death of a 58-year-old man in Sydney, NSW Police has said.

The driver of a 2007 Honda CR-V collided with a Toyota Celica at an intersection in the south-western suburb of Cabramatta on July 13. The man died at the scene, while the driver of the Celica and passengers from both cars suffered minor injuries.

The Metropolitan Crash Investigation Unit has determined the likely cause of death was a small piece of shrapnel, which was lodged into the man’s neck after the airbag exploded.

Honda Australia released a statement expressing their sympathy over the weekend, and confirmed the vehicle was part of a global recall due to a faulty Takata airbag.

“We are aware through NSW Police that an accident occurred on July 13, 2017, and resulted in the tragic death of the driver,” said director Stephen Collins.

“Our thoughts and deepest sympathies are with the family of the driver during this difficult time. The vehicle involved, a 2007 Honda CR-V, was the subject of Takata airbag inflator recalls.”

“Honda Australia is working closely with authorities to provide whatever assistance is required.”

The Australian Competition and Consumer Commission (ACCC) also announced on Monday morning that it would be investigating the incident, and is seeking more information from government authorities around the information provided to consumers about the recall.

The Sydney Morning Herald’s Drive magazine found over the weekend that over a million drivers in Australia are still waiting to have their airbags replaced. 2.1 million vehicles in total have been recalled across the ditch.

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ACCC files legal action against Audi

The Australian Competition & Consumer Commission (ACCC) has filed further legal action against VW subsidiary Audi, alleging the German car maker used a defeat device in its diesel vehicles to evade emissions regulations between 2011 and 2015.

The latest filing is a continuation of proceedings the consumer watchdog first launched against VW on September 1 last year.

The ACCC claims Audi “engaged in misleading conduct by representing that the vehicles complied with all applicable regulatory requirements for road vehicles in Australia when, because of the defeat software, that was not the case.”

“Audi Australia marketed the vehicles in Australia as being environmentally friendly, producing low emissions and complying with stringent European standards when this was not the case under normal driving conditions,” the report continued.

“Consumers expect that there is some relationship between the performance of the car as set out in the sales brochure and their day to day on-road use,” ACCC Chairman Rod Sims said.

“We allege that the installation of software which allows the vehicle to meet testing standards but then causes the vehicles to operate differently on the road… breach the Australian consumer law.”

While Skoda-branded vehicles are also affected by the VW emissions scandal, the ACCC has decided against further action against VW, noting the lower volume of Australian sales and continuing class actions.

Audi Australia has supplied more than 12,000 affected vehicles to Australian consumers, according to the ACCC.

In December 2016, VW and Audi Australia announced a recall and software update for the affected vehicles designed to repair diesel vehicles affected by the emissions scandal.

Audi Australia told Fairfax Media the ACCC’s action didn’t provide any practical benefits to consumers. “The company believes that the best outcome for those valued customers with an affected vehicle is to have the voluntary recall service updates installed,” its spokesperson said. The company will review the ACCC’s claims and defend class-action lawsuits from private drivers.

The Audi-branded vehicles covered by these proceedings are:

A1 3 Door – 2011 to 2013
A1 Sportback – 2012 to 2015
A3 Sportback – 2011 to 2013
A4 Allroad – 2012 to 2015
A4 Avant – 2011 to 2015
A4 Sedan – 2011 to 2015
A5 Cabriolet – 2012 to 2015
A5 Coupe – 2012 to 2015
A5 Sportback – 2012 to 2015
A6 Avant – 2012 to 2015
A6 Sedan – 2011 to 2015
Q3 SUV – 2012 to 2015
Q5 SUV – 2011 to 2015
TT Coupe – 2011 to 2014

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ACCC denying insurance caps

The Australian Competition and Consumer Commission (ACCC) issued a draft determination on Friday to deny a 20 per cent cap on commissions paid to car dealers who sell add-on products for insurance companies.

Last September, The Australian Securities and Investments Commission (ASIC) issued a report which claimed the market was “failing consumers”, who were being sold expensive products with little benefit. The report found that consumers received $144 million in successful claims from the $1.6 billion in insurance premiums paid over three years.

Add-on insurance is sold at the time of purchasing a motor vehicle and includes both financial insurance, such as consumer credit insurance, gap insurance, walk-away insurance, trauma insurance and vehicle insurance, including comprehensive insurance, extended warranty insurance, or tyre and rim insurance.

“The factors identified in ASIC’s report mean that consumers are often unable to make optimal, well-informed choices when buying add-on insurance products when buying a car from a dealer. A cap on commissions does not address these issues,” ACCC Chairman Rod Sims said. “The ACCC considers that the proposed cap is unlikely to result in a public benefit.”

“While insurers would benefit from a cap at the expense of car dealers, this conduct is likely to lessen competition between insurers, including by creating greater opportunities for explicit or tacit collusion and greater shared knowledge between insurers of competitors’ costs,” he added.

The Australian Automotive Dealer Association (AADA), who has been fighting the proposal since it was first announced, is “delighted” with the determination. “It accords strongly with the direction of our own submissions on this subject and represents the accomplishment of many hours of hard work and the strong representations we have put before ACCC on this vital issue.” AADA CEO David Blackhall said.

The ACCC will continue accepting submissions until a final decision is reached on March 3.

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