Regulation Impact Statement Updates

Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.

Franchise relationships between car manufacturers and new car dealers

Aust Gov
12th June 2020

Regulation Impact Statement – Department of Industry, Science, Energy and Resources

On 1 June 2020, the Minister for Industry, Science and Technology announced options to address concerns with the power imbalance between car dealers and manufacturers.

This RIS identifies four options for regulatory intervention which will have a positive net benefit. Together these options seek to address the identified problems in the new car retailing sector in scope for this RIS:

  • Option 2A – requiring manufacturers and dealers to provide at least 12 months’ notice when not renewing a dealer agreement. It will also require manufacturers and dealers to discuss, plan and agree end of term arrangements when not renewing an agreement.
  • Option 2B – requiring manufacturers and dealers to provide a statement to the other party outlining why a dealer agreement is not being renewed.
  • Option 2D – requiring pre-contractual disclosure of significant capital expenditure to have a greater degree of specificity.
  • Option 2F – enabling multi-franchisee mediation.

A Regulation Impact Statement (RIS) for consultation was prepared by the then Department of Industry, Innovation and Science and was published on 20 December 2018.

The Department prepared and certified a RIS, which on 9 October 2019 the Office of Best Practice Regulation (OBPR) assessed as compliant with the Australian Government RIS requirements and consistent with best practice.

The RIS estimates the average annual regulatory costs at $4.575 million.

A second round of consultation occurred in February 2020 by the Department of Industry, Science, Energy and Resources and the RIS was re-published on 24 February 2020. There were no consequential changes to the RIS as a result of this additional consultation and as such the RIS was not reassessed by the OBPR.

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