TACC news

Farm machinery, motorcycle, truck dealers left high and dry

2 August 2021

The introduction of a new automotive section into the Franchising Code of Conduct only applies to new-car dealers.

Leaving farm machinery, motorcycle, and commercial vehicle dealers out of franchising reforms could threaten their survival, cause significant local job losses and leave the businesses they service without crucial equipment.

The peak bodies representing farm machinery, motorcycle and truck dealers in Victoria and Australia, the Victorian Automotive Chamber of Commerce (VACC) and its national body, Motor Trades Association of Australia, seek the inclusion of farm machinery, motorcycle, and commercial vehicle dealers in new-car dealer retailing franchising reforms that became active from 1 July 2021.

The government omission is puzzling, as the infrastructure requirements, capital expenditure, and business model for farm machinery, motorcycle and truck dealers is identical to that of new-car dealers.

The new regulations do not apply to all franchise motor vehicle dealerships, only those that come within the definition of a ‘new vehicle dealership agreement’, which refers to dealerships that predominantly deal in new passenger vehicles or new light goods vehicles (or both).

Franchise agreements dealing with farm machinery, motorcycles, and trucks will not be captured under the new provisions. Consequently, these sectors won’t be afforded the same level of protection under the Franchising Code that new-car dealers enjoy.

“VACC does not understand why the Australian Government has made this policy distinction. The word ‘predominantly’ in the definition is likely to be closely scrutinised by overseas-based franchisors who seek to avoid the application of the new regulations in Australia,” said VACC CEO, Geoff Gwilym.

“We have historically seen unscrupulous behaviours in these areas from overseas-based franchisors to our farm and motorcycle dealer franchisees. We can’t risk another Holden or Honda scenario for these vital sectors.

“The government has now created two regulatory regimes for dealing with automotive franchise dealerships. One that is comprehensive, the other which is not, and it is the predominantly rural and regional businesses that miss out. VACC wants to know why.”

ENDS