New car manufacturers that mislead consumers into using dealers over independent retailers for repairs have been put on notice by the Australian Competition and Consumer Commission.
The consumer watchdog has released its draft report of an almost 12-month market study into Australia's new-car retailing industry, revealing there were 10,000 complaints about manufacturers over the past two years.
It comes just two weeks after the ACCC instituted Federal Court proceedings against Ford, over allegations it misled customers and on-sold surrendered vehicles without disclosing their mechanical faults.
ACCC chairman Rod Sims described the findings of the "consumer-led" market study as "startling".
"When we look at our top 10 most complained about traders over the last couple of years, it is strongly dominated by new car retailers," he told Fairfax Media.
"Even more startling is that in 2017 so far, nearly 20 per cent of enquiries to the ACCC about consumer guarantee issues concern motor vehicles. That's enormous."
The market study homed in on the complaints handling systems of manufacturers that do not to comply with obligations under Australian Consumer Law, while calling for more accurate information about emissions and fuel consumption.
It highlighted a dominant "culture of repair," a focus on warranty obligations in place of consumer guarantees and widespread use of non-disclosure agreements when resolving complaints as key issues for consumers trying to enforce their rights.
Across the board, the ACCC found consumers were not being issued adequate information about consumer guarantees during the point of sale of a new car.
The draft report also made the case for a mandatory scheme among manufacturers, obliging them to share technical information and parts with independent repairers.
Last year around 1.1 million new cars were sold at more than 1500 new car dealers, operating more than 3500 retail outlets.
Total car dealer revenues are estimated to be $64 billion in 2016-17, while roughly 40,000 manufacturer-authorised and independent car repair and service businesses are expected to earn $18 billion.
The profit margin on servicing for car dealers is estimated to be 54 per cent.
"That figure is just stunning," Mr Sims said, "and we think it's got a lot to do with manufacturers probably misleading people to use dealers for repairs."
He said new cars were not only made up of mechanical parts, but "over 10 million lines of computer code", more than that used to operate on-board support systems of modern airliners.
According to the ACCC, independent repairers faced challenges, because "few car manufacturers provide equivalent access" to the technical information provided to their dealers, both reducing competition and raising prices.
The market study also found consumers were not being given accurate information about the fuel consumption of new cars, citing research from the Australian Automobile Association that indicated real-world fuel consumption is on average 25 per cent higher than official laboratory test results.
"When you think of the fact cars are the second-biggest purchase any consumer makes ... it's not a pretty picture," Mr Sims said.
"Right now you have a chance of not getting your consumer rights, paying too much for servicing and getting false information about your fuel economy ... this report is meant to change the game."
It has been an eventful year for Australia's car manufacturing industry.
Last week the ACCC accepted a court enforceable undertaking from Holden, in relation to findings that it misrepresented consumers' rights under consumer law.
Ford also remains in the spotlight, after the watchdog launched legal proceedings in response to the handling of more than 30,000 vehicles containing an allegedly faulty transmission system.
Meanwhile, 14 Australian manufacturers are still facing the effects of the global Takata airbag recall, including Toyota, Honda, Mazda, BMW, Lexus, Ferrari and Ford.
The story 'Not a pretty picture': ACCC puts new car industry on notice first appeared on The Sydney Morning Herald.