Lemon Laws: What Are They? Do We Really Need Them?

THE OFFICIAL PUBLICATION OF THE AADA I ISSUE 9 AUGUST 2015 LEMON LAWS: WHAT ARE THEY? DO WE REALLY NEED THEM?

GET TO KNOW AADA’S NEW CEO: INTRODUCING BRUCE MCDONALD THE BIGGEST PRODUCT RECALL IN AUTO HISTORY – ARE YOU AFFECTED?

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CONTENTS ISSUE 9 AUGUST 2015 WELCOME CONTACT AADA From the AADA Chairman...... 4 (03) 9576 9944 or From the AADA CEO...... 4 Level 1, 350 South Road Hampton East VIC 3188 POLICY VIEWPOINT Introducing Bruce McDonald, AADA CEO...... 5-6 ABOUT US Issue No. 9 August 2015 ACCC Cautions On Parallel Imports...... 7 PUBLISHER: AADA When Life Gives Us Lemons, Do We Need Lemon Laws?...... 8 AADA Submits That All Dealers Should Have Access To Small Business Ombudsman...... 9 MANAGING EDITOR: Luke Scicluna AADA Responds To Government’s Better Tax Reform...... 10-11 ART DIRECTOR: Richard Jardine Participate In The National Dealer Attitude Survey...... 12 Unfair Contract Term (UCT) Protections Extended To Small Businesses...... 13 ADVERTISING MANAGER: Geoff Vine Government’s New Accelerated Depreciation Scheme Good News For Dealers...... 14 [email protected] A Compelling Case Against The LCT...... 16 Mobile: 0413 854 779 Supplementary Submission To Government Received...... 17 PRODUCTION MANAGER: Stace Nagle FEATURES [email protected] No Quick Fix for 53 Million Defective Airbags...... 18-19 Phone (03) 9576 9944 | Fax (03) 9576 7277 Genuine Is Best...... 20 Consumer Guarantees VS Manufacturer Warranties...... 21 AUTOMOTIVE DEALER Who Owns The Goodwill In My Dealership – Dealer Or Manufacturer?...... 22 DELIVERY/CHANGE OF ADDRESS Goodwill – What Is It, Who ‘Owns’ It And How Is It Valued?...... 23 (03) 9576 9944 or How Bright Is The Future For Electric Cars? ...... 24-25 [email protected] Out With The New And In With The Old...... 26 EDITORIAL Is George Soros Looking To Join The Car Club? ...... 27 [email protected] Mixed Response To Brisbane AutoMall...... 28 AADA’s All-New NADA Study Tour: Not Just Business As Usual...... 30-31 EDITORIAL & ADVERTISING OFFICE Would You Buy Mr Otaki’s 2013 Toyota Crown? ...... 32 Lvl 1, 350 South Rd, Hampton East VIC 3188 Training Matters: NADA Courses Highlight Potential For Profits...... 38-39 PRINTER: Ability Press Accessing International Automotive Workers: Levelling The Playing Field...... 42 MAILHOUSE: Mailing Promotions Luxury Car Tax Threshold Update...... 43 DISTRIBUTION: Australia Post How Many Is Too Many? ...... 44 DISTRIBUTION: 4,657 PROFILE

No responsibility is accepted by the publisher “I’m A Gypsy,” Says Noel Gould, Owner, Swan Hill Automotive Group...... 36 for the accuracy of information contained MOTORSPORT in advertisements in the Automotive Dealer On Track With Crenno - Motorsport Memorabilia...... 40-41 magazine. Publication of any advertisement does not constitute endorsement by the publisher WORKPLACE RELATIONS of any product, nor warrant its suitability. Employing Staff Casually VS Part-Time...... 45 Advertisements are published as submitted by What Are The Rules Governing Sick Leave And Carer’s Leave?...... 46 advertisers. ‘Dad And Partner Pay’ – What Is It And How Does It Work?...... 47 COPYRIGHT SALES & MARKETING No part of this magazine may be reproduced 7 Tips For Dynamite Digital Advertising...... 48 without the publisher’s written permission. The 10-Minute Invisible Service Manager...... 50-51 CONTRIBUTORS Incoming: Winter Not Stopping Hot New Models Rolling In...... 52 The views expressed in Automotive Dealer by A Strong June Helps Push Australia’s Total New Car Sales Volume Over Half A Million...... 53 external contributors and advertisers are not 2015 AADA NATIONAL DEALER CONVENTION necessarily those of AADA. Australia’s Dealers Gather For AADA Convention...... 54 A Song Of Sales And Service...... 54 Exclusive Dealer-Only Symposium To Kick Off AADA Convention...... 55 The Penske File...... 56 Another Reason To Attend This Convention...... 57 Do You measure Up?...... 58 Share your An Expo Of Innovation And Entertainment...... 59 The Future Of The Auto Industry...... 60 thoughts with us. Changing Times, Changing Trends...... 61 Got a question, comment or EDITORIAL want to tell us your theory on 3 Reasons Why Your Dealership Needs To Be Mobile...... 62-63 Improving Aftersales Revenue...... 64 the meaning of life? Write to us The Impact Of Balance On Bottom-Line Performance...... 65 at editor@automotivedealer. Clean Up Your Customer Satisfaction And Retention With Car Washing...... 66 com.au. Letters must be addressed to the editor and should be short and sweet STAY IN TOUCH WITH AADA ON LINKEDIN AND TWITTER (no more than 150 words). Simply search our name the next time you’re on LinkedIn and find us on Twitter using @AADA_ASN. Be a part of our social channels and connect with like-minded Dealers, share your opinions and learn about pressing industry issues as they happen. WELCOME Australian Automotive Dealer Association

FROM THE AADA CHAIRMAN

Ian Field AADA Chairman

he new AADA, now in its second year, To be fair to past representatives, if motor Without engagement from the majority has come a long way in a very short dealers really want to change community of Dealers, to get involved in policy Ttime. Motor dealers now have qualified attitudes, to bring understanding of the size determination, we will again stand the risk of representatives who only manage new vehicle and importance of our businesses within allowing non-Dealers to take over and make franchisee interests, without being conflicted the Australian economy, we must move decisions on our behalf. by other industry segment interests. We still beyond complacency and challenge wrong have a long way to go to convince the public, perceptions. I encourage new vehicle franchisees to make a that the stereotyping of motor dealers is real difference by becoming actively involved. outdated and just not correct. The new AADA has been funded to-date If you personally do nothing, nothing changes by about 30 per cent of franchisees who sell for you. Being a silent critic is no longer an For too long we have allowed used car dealers, over 60 percent of the volume. Most Dealers option. There is now a viable alternative. panel beaters, service station operators or will now be involved financially through the independent repairers, to talk on behalf of the membership fees, agreed by Dealer councils. ‘motor industry’, with no specific focus on the That funding will provide ongoing ability to complexity of a modern new vehicle franchise. employ highly skilled staff, to act solely on This lack of focus on who we are must be behalf of our $72 billion per year industry. changed and public attitudes challenged.

A WORD AADA’S NEW CEO

Bruce McDonald AADA CEO

t is a pleasure, in fact, an honour, to welcome However, the importance of the automotive the upcoming 2015 AADA National Dealer you to this edition of Automotive Dealer, in dealer, and his or her staff, in understanding, Convention, commencing on 10 August. I Imy new capacity as CEO of the Australian satisfying and ideally exceeding customers’ specifically want to draw your attention to the Automotive Dealer Association. expectations, will never change. It’s an exciting convention theme – Stronger Together. Those industry! I’m delighted to be part of it, again. Dealers who know me will confirm my strong By any measure, the Australian car industry commitment to the principle that the most is the ‘heartbeat’ of our economy. People My initial conversations with Ian Field and successful business outcomes occur when buy new cars, SUVs and light commercials Patrick Tessier have confirmed just how far the business partners work together. It’s a principle to satisfy a specific need. And they buy them ‘new’ AADA has come under their committed and way of doing business which has never from you! and energetic leadership. My role is to build on been more necessary. that momentum and help take us to the next There is a lot written these days about the level. I look forward to personally meeting you at radical changes which are occurring in the the Convention. It will undoubtedly be the world of retail and service. The automotive On a related subject, there’s no doubt the best ever, so don’t miss the opportunity to be sector is no exception. single most important event this year which part of it and gain the maximum benefit for is guaranteed to move us in that direction is your business.

4 | AUGUST 2015 | automotivedealer.com.au POLICY Australian Automotive Dealer Association INTRODUCING BRUCE MCDONALD, AADA CEO

Following 28 years with Ford Motor Company, along with other successful career pursuits, AADA is proud to appoint Bruce McDonald as its new CEO

ruce McDonald has established himself This is something that Bruce has a particular In the mid-90s he was posted to Ford World as an automotive industry leader both in interest in. Headquarters in Detroit where he conducted BAustralia and on a global scale. extensive brand-strategy training, plus a ‘I strongly hold the view that Dealers and their Dealer-facing role in Ford Division, before His enviable resume highlights an enthusiasm franchisors can only achieve maximum mutual taking on the opportunity to run the New York for Australia’s automotive industry, and a track benefit through an enduring partnership’ Ford Division Regional Office. record of leadership that’s defined by integrity. Bruce said. It’s for these reasons and more that AADA is By the turn of the century, Bruce was back ‘I have always had a strong admiration of the thrilled to welcome Bruce as its first permanent risk taken by Dealers who invest in an auto down under, as Vice President of Marketing CEO, following Patrick Tessier who will hand franchise, as well as their right to earn an and Sales for Ford Australia. over the reins from his interim position. acceptable return on their investment.’ During his five years in the role, Bruce helped Bruce, who will officially commence as CEO As part of his extensive career, Bruce enjoyed significantly strengthen the relationship on July 1, is the ideal candidate for the role 28 successful years with Ford Motor Company between Ford and the national Dealer network. and will no doubt help the Association achieve here in Australia, as well as several key roles in He also oversaw the launch of the iconic Ford important objectives, including stronger bonds the USA and various projects in Asia-Pacific Territory in 2004, which was an exceptional between OEMs and Dealers. markets. success at the time.

automotivedealer.com.au | AUGUST 2015 | 5 POLICY Australian Automotive Dealer Association

Bruce’s final role with Ford was Vice President, background will help the AADA continue Patrick’s involvement in the auto industry Ford Customer Service Division, with its to balance the relationship between Dealers stretches over 30 years, and whilst he will inherent focus on Dealers’ fixed operations. and manufacturers. We need an open and no longer oversee the AADA as CEO, he collaborative working relationship with OEMs will return to his long-standing roles as In this role, he was appointed to further to forge ahead and Bruce will help facilitate Convention Director and International reinvigorate the Dealer network relationship, this.’ Relations Advisor. improve employee engagement and drive profit – all objectives he helped achieve despite Bruce has also acknowledged the opportunity Patrick will also help facilitate the success of a difficult period for the company, including a to work with the newly formed Australian NADA University in Australia. contracting brand image and sales. Motor Dealer Council: ‘It has been an honour to serve Australia’s Dealers and be a part of AADA’s re-creation,’ In the period since his Ford career concluded ‘Whilst the AADA charter differs from that in late 2008, Bruce has successfully run his Mr Tessier said. ‘We’ve achieved so much in of the AMDC, my respect for its Independent own consulting business focusing on four key a short amount of time and I am particularly Chairman, Doug Dickson will no doubt help elements of business success: inspirational proud of the strong relationships that have contribute to our collaborative success.’ leadership, differentiated strategy, engaged been formed with our sister Associations here and abroad.’ employees and delighted customers. As Bruce is welcomed into the role of CEO, As the new CEO of AADA, Bruce will use the AADA is simultaneously congratulating With strong foundations now in place, the his experience, industry understanding and interim CEO Patrick Tessier on a job well appointment of a permanent CEO for AADA connections to help foster and protect Dealer done. will help the Association continue to achieve interests. great outcomes for Dealers across the country. ‘Patrick has achieved what he set out to do’ ‘The appointment of Bruce McDonald is an said AADA Chairman Ian Field. ‘Patrick has done a commendable job in exciting step forward for the Association,’ said helping establish the revitalised AADA. Now, AADA Chairman Ian Field. ‘Without Patrick’s involvement, it would with the appointment of Bruce McDonald we have been impossible to establish the current anticipate a bright future for the Association ‘Not only is Bruce equipped with formidable AADA in as quick and effective a manner as and our members moving forward’ said Mr industry knowledge, but his OEM we have over the past 12 months’ he said. Field.

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he view of the AADA on the issue of Chamber of Automotive Industries (FCAI), ‘You may not be able to get assistance such parallel imports is well-documented ACCC uncovers the lack of support and as product/technical support or repair/spare Tand now the Australian Competition assistance consumers with faulty imported part facilities from the local manufacturer or and Consumer Commission (ACCC) has products may experience: their representative. For example, the software weighed in on the discussion, highlighting the of your product may not be suited for the significant risk for consumers surrounding this ‘It may be more difficult to obtain a remedy if Australian market.’ matter. something goes wrong with a parallel import’, the website states. The Assistant Minister for Infrastructure and On the ACCC website on the page titled Regional Development, the Hon Jamie Briggs Buying Parallel Imports, it states that while Further to this, the ACCC reveals many MP has been a major player behind the drive parallel imports may be of benefit in the potential warranty pitfalls that consumers to allow parallel importing for motor vehicles. way of ‘lower prices and providing access to should take heed of. For example, ‘if the items which otherwise may not be available product comes with a manufacturer’s warranty But even Mr Briggs himself has warned about in Australia’ shoppers need to be aware of the – that warranty may not apply in Australia.’ things going wrong. complexities of such a process. Specifically, the ACCC says ‘you need to be able to identify The ACCC also states that ‘although your ‘Clearly it’s a big purchase, it’s a big risk for you when you are buying parallel imports and be products may carry a particular or popular to take,’ Briggs said. aware of your rights when purchasing these brand name – if it is sold to you as a parallel products.’ import, the local manufacturer is not required A risk worth taking? to help you if the product develops a fault.’ As already highlighted by the AADA, along AADA, along with an increasing number of with other associations like the Federal And even more worrying for consumers: voices from the auto industry, believe not.

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1300 66 11 33 dealersolutions.com.au POLICY Australian Automotive Dealer Association WHEN LIFE GIVES US LEMONS, DO WE NEED LEMON LAWS?

It’s a contentious topic that’s sweeping Australia; whilst introducing lemon laws may have merit, singling out the automotive industry does not

emon laws are intended to protect Queensland Attorney-General Yvette D’Ath of pride, something that often represents consumers with cars that have had is another prominent figure calling for conscious saving and sacrifice and which is Lmultiple faults or exceeded a set Australian lemon laws, recently stating: expected to provide years of faultless service. number of days in the workshop because of repairs. When these limits are exceeded, ‘I’ve heard some shocking stories where year However, just like whitegoods, electronics, manufacturers are forced to offer customers a after year, sometimes five years, where the marine equipment and products from any new replacement or refund. car’s still going in for a month at a time being other industry – sometimes components repaired and yet the Dealer’s not willing to fail, and most of the time they can be easily Whilst lemon laws do not currently exist in replace the vehicles.’ repaired. Australia, we have been historically protected by Australian Consumer Law (ACL) – the Ms D’Ath, who believes ACL does not provide With this mind, AADA believes that if the sweeping legislation that helps ensure shoppers enough protection for new car buyers, has set Government wishes to legislate lemon laws, are treated fairly when consuming goods and up a forum for people to provide their own they should cover the entire retail industry – services. personal (negative) experiences. not only automotive. Yet now, many voices across the nation are ‘Certainly I’ve heard many stories that people calling for added protection. The movement do not believe the Australian consumer law ‘Any proposals should not be limited purely to has been spearheaded by a number of people is adequate enough to protect them and there cars – they should apply to other goods, from and events, including last year’s infamous has been a call from some in the community farming equipment to household appliances’, Destroy My Jeep campaign. Disgruntled Jeep for lemon laws similar to the United States,’ says AADA Policy Director, Michael Deed. customer Ashton Wood, who had appealed she said. to Fiat Chrysler to replace his car, ultimately However, as is often the case, the automotive destroyed it – as part of a major awareness Buying a new car is an emotional purchase. industry and particularly its retail arm, are campaign. For many shoppers, their car is a great source portrayed as culprits.

8 | AUGUST 2015 | automotivedealer.com.au POLICY Australian Automotive Dealer Association

‘Automotive dealers are an easy target,’ says Former AADA CEO Patrick Tessier, ‘however AADA SUBMITS THAT what many people don’t understand is that the decision to refund or replace a vehicle is something that is made at a manufacturer level. In serious situations where a car needs ALL DEALERS SHOULD major or multiple repairs, Dealers look to their manufacturer for direction, and the manufacturers work within ACL guidelines.’ HAVE ACCESS TO SMALL Whilst lemon laws do not currently exist, in almost all cases ‘common sense prevails’ – a point made by Tessier: BUSINESS OMBUDSMAN ‘Nobody enjoys the inconvenience that product faults cause. And sometimes we can be particularly unlucky. In the case of automotive, common sense will prevail. And the fact is that in serious cases where a car’s safety is jeopardized, a manufacturer will replace it.’

However if lemon laws were to be legislated, clear and fair guidelines for what constitutes a ‘lemon’ will be critical. For example, a pain point for many Dealers is the ‘loss of faith’ some drivers experience after a major fault in their car. Some customers demand a new car after an isolated component failure, like a gearbox. Though it’s a significant malfunction, after replacement, the car remains in perfectly egislation establishing the appointment of codes of conduct and fair trading provisions safe and useable condition. an Australian Small Business and Family and the behavior of regulators. The assistance LEnterprise Ombudsman (Ombudsman) function allows the Ombudsman to act as a There would be no logical reason to replace has been referred by the Senate to the Legal concierge for dispute resolution. a car in this scenario, other than to appease and Constitutional Affairs Legislation the consumer who has developed a false Committee for inquiry and report by 11 Access to the services of the Ombudsman perception that the entire vehicle is faulty. August 2015. The Committee Chair is Senator is limited by the definition of a small According to AADA Chairmen Ian Field, cars the Hon Ian Macdonald and the AADA businesses to a business with fewer than 100 built today are far better in quality than their has been invited to provide a submission employees or having revenue of $5 million predecessors. addressing issues that may be of relevance. or less in the previous financial year.

‘New cars are more reliable now than they In the consultation period leading to the AADA’s submission to the Senate Committee have ever been – it’s no coincidence that drafting of legislation and introduction of restated its position that the definition of some manufacturers are offering warranties the bills, the AADA lodged two submissions small business should be based on the as long as seven years. Yes, sometimes things which can be accessed at aada.asn.au. The concept of ‘relative size’ where a significant Bills are the Australian Small Business and go wrong, but it would be unreasonable for imbalance of economic or market power Family Enterprise Ombudsman Bill 2015 and consumers to expect replacement vehicles at exists. AADA also referred the Senate the Australian Small Business and Family the drop of a hat.’ Committee to the Motor Vehicle Dealers and Enterprise Ombudsman (Consequential and Repairers Act 2013 (NSW) (MVDR Act) that Moving forward, a review of dealership Transitional Provisions) Bill 2015. agreements may be required to clarify liability regulates the relationship between NSW motor and responsibility. In any case, Dealers will The Ombudsman has a number of powers and vehicle dealers and manufacturers in dealing work within the law to ensure that consumers functions to give small businesses the help they with contractual disputes and unjust conduct experiencing difficulties with their cars receive need and to help Government policy makers by a manufacturer. assistance in-line with their rights. better understand the concerns of small businesses. The Ombudsman has an advocacy Details of the Senate Inquiry can be accessed Whether that includes lemon laws is yet to be and assistance function as well. Under the at http://www.aph.gov.au/Parliamentary_ seen, but this is an issue that will be followed advocacy function the Ombudsman may Business/Committees/Senate/Legal_and_ closely by Automotive Dealer. monitor and report on the efficacy of industry Constitutional_Affairs/Small_Biz_Ombudsman

automotivedealer.com.au | AUGUST 2015 | 9 POLICY Australian Automotive Dealer Association AADA RESPONDS TO GOVERNMENT’S BETTER TAX REFORM

AADA’s submission to the Treasury Tax White Paper Task Force addressed a number of issues relating to tax reform and called on the Government to abolish the Luxury Car Tax (LCT)

he Government’s tax discussion paper, VFI refers to the mismatch between the Equitable distribution of GST revenue is a Re:think, invited Australians to join in expenditure responsibilities of the States and challenge, including the complexity of State Ta national conversation on tax reform. Territories relative to the revenue raised, and local governments to make up revenue The Government says that it is committed to a making them reliant on Commonwealth shortfalls increasingly through ‘quasi taxes’. better tax system to deliver lower, simpler and government funding in areas such as health There are over 100 different taxes in Australia, fairer taxes. and education. HFE is the mechanism to reduce fiscal disparities between the States and but the majority of revenue is collected from In its submission, AADA noted that the Territories to allow for an equivalent level of just a handful – including 81 per cent from individuals and corporations. biggest challenge facing the Government is services to all Australians – regardless of where they live in the country. managing the politics of tax reform and it AADA referred to a recent CPA Australia recalled the words of a leading tax scholar: report and modelling which examined ‘tax is politics with a dollar sign in front’. Goods and Services Tax the impact of GST changes to the rate and base. This clearly demonstrated benefits GST revenue accounts for 12 per cent of Issues like effectively handling the goods and to Australia’s GDP while at the same time Federal tax revenue. State and Territory services tax (GST) as well as the sensitivity acknowledged the challenges facing the Governments receive 45 per cent of around superannuation may hinder the Government. The Business Council of their revenue from the Commonwealth Australia also estimates that GST exemptions process of ‘genuine’ tax reform. Government. cost more than $20 billion in foregone AADA noted that a key issue to address (and Under the Intergovernmental Agreement all revenue, compared with GST revenue of $50 reform) is the financial relationship between GST revenue is distributed and it is unlikely billion per year. the Commonwealth, States and Territories. the base and rate of GST will change unless AADA called on the Government to present That is, the degree of vertical fiscal imbalance there is unanimous agreement between all the a range of options for consideration through (VFI) and horizontal fiscal equalisation (HFE). States and Territories. modelling which shows the effects of broadening the base and increasing the rate of GST. Individuals

Personal income tax is the major source of Government revenue accounting for around half of tax receipts. Income tax thresholds are not indexed to inflation, meaning individuals will face higher average tax rates even if their income has only increased due to inflation.

TheBetter Tax discussion paper stated between 2014-15 and 2024-25, the percentage of taxpayers in the top two tax brackets (taxable incomes in excess of $80,000) is estimated to increase from around 27 per cent to 43 per cent under current policy settings.

10 | AUGUST 2015 | automotivedealer.com.au AADA contended that the excessive burden These selective taxes should, according to the on individual taxpayers through bracket report on Australia’s Future Tax System (the creep is not sustainable and bracket creep Henry review), be imposed for one of three mitigation should be funded from other purposes: reform measures and structural changes to Government spending. • to improve market or social outcomes; Company Tax • to help counteract self-control problems (in the special case of alcohol); and Australia’s corporate tax rate of 30 per cent is higher than the OECD average and many • to improve market efficiency through countries in the Asia-Pacific region. appropriate price signals.

AADA noted that while a lowering of the The Henry review stated ‘Revenue should be corporate tax rate could increase overseas a by-product of such taxes, not the reason for investment, there are many factors to them.’ It also noted the LCT discriminates consider including the need to respond to against a particular group of people because of Media reports confirmed by the Treasury a global perception that the corporate tax their tastes. It is a complex and ineffective way estimated that over 2 million more taxpayers rate is too high at a time when many other of distributing income from rich to poor. will be in the third income tax bracket (taxable countries are lowering the rate. AADA’s submission included a discussion income from $80,000 to $180,000) in 2024-25, on the case for abolition of the LCT which compared to 2014-15. Moreover, it is estimated Indirect taxes you can read more about on page 16. there will be around 750,000 more taxpayers in AADA believes that tax reform cannot the fourth tax bracket (taxable income above The Australian government collects a range of take place without harmony between the $180,000) in 2024-25 compared to 2014-15. It indirect taxes levied on specified goods and Commonwealth and States, who should is estimated that about 80 per cent of the rise services including fuel taxes, alcohol taxes, agree to act responsibly to ensure budgets in revenue in the 2015-16 budget would come tobacco tax, the LCT, agricultural levies and are not in structural deficits over the long- from bracket creep. tariffs. term.

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BDO, a leading Automotive accounting and consulting firm, has been engaged to facilitate a national Dealer Attitude Survey – and all should participate

or the first time in Australia, AADA will give franchised motor dealers the Fopportunity to provide meaningful feedback on key franchise and operational matters which impact the relationship between the retail Dealer network (franchisees) and the manufacturers/importers (franchisors).

Additionally the survey is expected to reveal the insights of Dealers regarding the future of the industry itself.

Thisvital feedback will be distilled through the ‘Dealer Attitude Survey’. AADA have engaged BDO, a leading provider of professional services to the automotive sector, to facilitate the survey and distil the responses.

BDO’s automotive partners, Mark Ward and Randall Bryson, will present the findings at this year’s AADA National Dealer Convention to be held in Melbourne in early August 2015.

Thesurvey is based on similar surveys insight and opinion regarding the dealership intended to be negative, rather an opportunity conducted by AADA’s sister associations, model going forward on a range of topics like for feedback and response as required. namely NADA in the United States and NFDA profitability, value, investment, consolidation, in the United Kingdom. AADA and BDO the cessation of local manufacturing and the ‘We hope that all of Australia’s Dealers will have designed the survey questions to follow a industry challenges they would like AADA to participate,’ said Mr Ward, ‘each survey should logical format. be contemplating. take around 15 minutes to complete and the identities of the participants and their In essence, the survey will be divided into four Each pillar will include a number of questions responses will remain anonymous. For Dealers pillars: designed to evaluate the opinions of Dealers who complete multiple surveys as a result representing each franchise, regarding the of representing multiple brands, we expect • Franchise – what is the current state of play? performance of the franchisor. subsequent surveys should take approximately 10 minutes each.’ • Financial – is the model sustainable? ‘Thesurvey is designed to identify opportunities to enhance the relationship ‘We look forward to distilling and presenting • Facilities – are you investing in your between the Dealer network and the the results of the survey at the AADA National facilities? manufacturers and importers,’ said Mark Dealer Convention. No doubt we will gain • Future – what does the future look like? Ward. valuable insights which will be useful for all parties’ said Mr Ward. We expect responses to questions about the Thesurvey is also intended to provide For more information about the survey, contact future to be particularly interesting. constructive feedback. Participants may choose to address areas of weakness if they Mark Ward, Partner, BDO on 07 3237 5744 or Throughparticipation in this survey, Dealers consider it necessary. It’s no different to an [email protected] nationally will have an opportunity to provide employee climate survey; the survey is not

12 | AUGUST 2015 | automotivedealer.com.au POLICY Australian Automotive Dealer Association UNFAIR CONTRACT TERM (UCT) PROTECTIONS EXTENDED TO SMALL BUSINESSES

Draft Legislation Released

• the term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and

• it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

A term that defines the main subject matter or sets out the upfront price of a contract, or a n 28 April 2015 the Minister for Small In its submission to the Government, AADA term that is required or expressly permitted by Business, the Hon Bruce Billson drew attention to the inconsistency and law, cannot be declared unfair by a court. OMP announced the release of draft complexity of the definitions of SMEs in legislation to extend unfair contract term income tax and other legislation and argued Date of Effect of New Laws protections to small businesses following a that the key concept should be the relative consultation process in mid-2014. size of the parties. The UCT protections Once legislation has been passed by the should be extended to all franchisee Parliament and receives Royal Assent, there Consumers have been protected from unfair agreements including motor vehicle dealership will be a transition period of six months before contract terms since 1 July 2010 and the agreements. the protections come into effect, which is Minister announced that ‘It is time that expected to be in early 2016. small businesses, which often face the same Small Business Contracts and vulnerabilities as consumers, receive strong Franchise Agreements Industry Specific Protection protections when contending with “take it or leave it” contracts.’ AADA understands the proposed laws can AADA’s submission referred to industry- apply to a franchise agreement provided it specific mechanisms that prohibit the use The proposed legislation will address the falls within the definition of a ‘small business’ of unfair contract terms in standard form potential for detriment where unfair contract contract. A contract is a small business contracts, such as the Motor Vehicle Dealers terms are enforced in standard form contracts contract if, at the time it is entered, at least one and Repairers Act 2013 (NSW). That Act with small business. party is a small business, and the upfront price regulates the relationships between NSW payable under the contract does not exceed motor vehicle dealers and motor vehicle The Meaning of Small Business either $100,000, or $200,000 if its duration is manufacturers in respect of unfair contracts more than 12 months. and unjust conduct. The unfair contract term protections are limited to a small business. A business is taken Effect of UCT Protections While the Commonwealth Government was to be a small business if it employs fewer than not inclined to extend similar protection 20 persons, excluding casual employees not An unfair term in a standard form small across all States and Territories the AADA employed on a regular basis. The threshold business contract can be declared void and is looking at a number of options. AADA’s of less than 20 employees was chosen for this unenforceable. A term will be unfair if: submission to the Treasury can be accessed on definition as it is a commonly used headcount either the AADA or Treasury websites. measure and has been found by the Australian • it causes significant imbalance in the parties’ Bureau of Statistics to provide a good proxy of rights and obligations arising under the Please note: This article should not be used as a small businesses. contract; and substitute for professional advice.

automotivedealer.com.au | AUGUST 2015 | 13 POLICY Australian Automotive Dealer Association GOVERNMENT’S NEW ACCELERATED DEPRECIATION SCHEME GOOD NEWS FOR DEALERS

ou may have heard the Government’s Your business may now be eligible to receive Tax advisory specialists, BDO Australia, have recent announcement of an immediate an immediate deduction on business expenses prepared a ‘Tax Savings Ready Reckoner’ Ytax deduction for small business asset against your income to reduce your tax bill. that calculates the immediate tax deduction purchases costing less than $20,000. amount for vehicles in a range of prices (see Meanwhile, the $20,000 threshold will apply to below): The measure came into effect on May 12 and new and used vehicles acquired and installed is expected to be passed as law by both houses ready for use between 13 May 2015 and 30 For more information about this latest of parliament. Any business that meets the June 2017. This means a potential increase Government scheme consult the ATO definition of ‘small business entity’ and turns in sales for dealerships from business owners website or speak to your professional over an aggregated sum of less than $2 million seeking to make new car purchases. After 1 advisors. may be eligible for the incentive, which is July 2017, the thresholds will revert back to expected to end by 30 June, 2017. existing arrangements.

TAXBDO SAVINGSTAX SAVINGS READY READY RECKONER RECKONER TAX YEAR TAX YEAR 30/06/15 Post 30/06/15 Post 30/06/16 to 30/06/16 to 30/06/17 30/06/17 Vehicle Cost Vehicle Cost Immediate Tax GST Input Tax / Cash Tax / Cash (inc GST) (ex GST) Deduction Tax Credit Savings @ Savings @ Net Vehicle Cost Refunded 30% 28.5% $5,500 $5,000 $5,000 $500 $1,500 $1,425 $3,500 $3,575 $6,600 $6,000 $6,000 $600 $1,800 $1,710 $4,200 $4,290 $7,700 $7,000 $7,000 $700 $2,100 $1,995 $4,900 $5,005 $8,800 $8,000 $8,000 $800 $2,400 $2,280 $5,600 $5,720 $9,900 $9,000 $9,000 $900 $2,700 $2,565 $6,300 $6,435 $11,000 $10,000 $10,000 $1,000 $3,000 $2,850 $7,000 $7,150 $12,100 $11,000 $11,000 $1,100 $3,300 $3,135 $7,700 $7,865 $13,200 $12,000 $12,000 $1,200 $3,600 $3,420 $8,400 $8,580 $14,300 $13,000 $13,000 $1,300 $3,900 $3,705 $9,100 $9,295 $15,400 $14,000 $14,000 $1,400 $4,200 $3,990 $9,800 $10,010 $16,500 $15,000 $15,000 $1,500 $4,500 $4,275 $10,500 $10,725 $17,600 $16,000 $16,000 $1,600 $4,800 $4,560 $11,200 $11,440 $18,700 $17,000 $17,000 $1,700 $5,100 $4,845 $11,900 $12,155 $19,800 $18,000 $18,000 $1,800 $5,400 $5,130 $12,600 $12,870 $20,900 $19,000 $19,000 $1,900 $5,700 $5,415 $13,300 $13,585 $21,999 $19,999 $19,999 $2,000 $6,000 $5,700 $13,999 $14,299 * Note this assumes the Small Business entity is a company, is registered for GST and the car has 100% business use.

BDO COMMENT 14 | AUGUST 2015 | automotivedealer.com.au If you have any queries in regards to the depreciation of motor vehicles for small businesses please contact BDO who will have one of their Automotive specialists assist you. Please note this information is general in nature and should not be used as a substitute for your own professional advice. Any tax benefit that may be available will be subject to your own circumstances.

MORE INFORMATION 1300 138 991 www.bdo.com.au

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances. BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO refers to one or more of the independent member firms of BDO International Ltd, a UK company limited by guarantee. Each BDO member firm in Australia is a separate legal entity and has no liability for another entity’s acts and omissions. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania. BDO is the brand name for the BDO network and for each of the BDO member firms. © 2015 BDO Australia Ltd. All rights reserved. UNLOCK ALL YOUR SECRETS IN 15 MINS

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For further information contact us at [email protected] POLICY Australian Automotive Dealer Association A COMPELLING CASE AGAINST THE LCT

AADA recently submitted its Tax White Paper Submission to the Government uncovering more reasons why the Luxury Car Tax (LCT) needs to go

‘The LCT is a discriminatory tax on an In its submission, AADA states that ‘Australia’s tax on an imported motor vehicle to the Australian consumer, as a tax policy LCT in the global tax landscape, penalises a exclusion of other ‘luxury’ goods is at odds instrument is no longer relevant, has passed its consumer on a discretionary purchase of a with Australia’s trade liberalisation policies,’ the used by date and should be abolished.’ motor vehicle [and] does not apply to other Submission contends. “luxury” goods.’ These were the closing words in the AADA’s AADA also drew on the accepted ‘principles submission to the Government, concluding This last point is particularly poignant of tax evaluation and design’, that is, the set of a six page document in response to the and highlights the injustice that cars are guidelines that any tax under scrutiny should Government’s call for feedback on tax reform. additionally taxed when luxury items such as be assessed. As covered in previous editions of Automotive yachts, furs and watches are not. Dealer, the Government wishes to create a These are equity, efficiency, simplicity, better tax system that delivers taxes that are Opinions from other submissions and major sustainability and policy consistency. These ‘lower, simpler and fairer.’ industry players were also used. were explored in relation to the LCT, exposing further holes in the tax. As part of this commendable initiative, AADA For example, in a VACC submission, the highlighted how the current LCT is at odds Association noted: ‘The European Union, and Of all the arguments put forward however, it’s with these objectives. some importers have criticised the LCT as a perhaps this line from the Henry Tax Review disguised form of protection for the Australian (which called to abolish the LCT) that best Whilst the LCT is estimated to generate $500 car industry’. It also says that ‘according to the sums up the situation: million of revenue (or about 0.1 per cent of European Commission, 90 per cent of vehicles Government revenue) between 2014/15, this subject to the LCT are imported and 50 per ‘Luxury taxes should not be used to raise comes at an estimated administrative cost of cent are from Europe.’ revenue. They are inefficient because of over $1.45 million per year, not to mention their narrow tax base. Taxing luxury goods the burden on businesses managing the If the LCT is a (thinly veiled) means to help is also an ineffective and arbitrary means of complicated paperwork associated with this protect and encourage Australian-made cars, redistributing economic resources.’ tax. the fact that local manufacturing will soon cease is another reason why the LCT is now If the Government truly aspires to create a tax In Australia, purchasing a new car already redundant – a point made by AADA. system that is lower, simpler and fairer it is attracts a multitude of taxes, including GST, hoped that they will take heed of this advice. fringe benefits tax, customs duty, registration ‘Most if not all motor vehicles will be imported fees, insurance, stamp duty, fuel excise and the into Australia once manufacturing ceases and To view the full copy of AADA’s Tax White LCT. to selectively target and impose an additional Paper Submission head to aada.asn.au

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16 | AUGUST 2015 | automotivedealer.com.au POLICY Australian Automotive Dealer Association SUPPLEMENTARY SUBMISSION TO GOVERNMENT RECEIVED

AADA has provided further indication to the Government of the risks associated with personal vehicle importing

he AADA has responded to the Considering these potential implications, invitation from the Government to AADA also mentioned that it would strongly Tprovide further feedback on proposals object to any attempt by the Government for reducing restrictions on personal vehicle to ‘legislate to transfer any ownership risk importation. associated with the personal import of a motor vehicle onto the authorised dealer network Following the Association’s well-documented which has not sold the vehicle.’ concerns surrounding the proposal – all of which can be found in our last major Instead, these inherent risks should remain submission to the Review, the AADA with the ‘buyer beware’ consumer. reinforced its case. Another important issue covered in the In the supplementary submission, AADA supplementary submission was the definition states: ‘we do not support the proposal as we of a ‘new car.’ believe consumer protection and safety are The MVS Act makes a clear distinction at risk and the Government has not carefully AADA points out that the Assistant Minister’s between a new and used vehicle and under the considered the implications of the policy proposed definition of a new vehicle includes: proposed definition a PIV would not be ‘new,’ relaxation’. but rather ‘used’. • A vehicle is of a ‘light’ category and is right- The risks of ownership of a personal import hand-drive From the AADA Supplementary Submission: vehicle (PIV) for Australian buyers were • The vehicle must be manufactured no more clearly spelled out, including: ‘A 4000 kilometre delivery mileage implies than 12 months prior to import application that the vehicle has been first used in transport • Lack of provenance of the vehicle outside Australia. We also submit the delivery • The vehicle is purchased from an authorised mileage requirement to be reduced to 1000 • No ANCAP safety rating Dealer located in a trusted vehicle source kilometres with an understanding that there is market potential for odometer fraud. • Lack of Australian Design Rules compliance • And the vehicle is permitted to have a We also submit that if a vehicle is first • Lack of manufacturer’s warranty and maximum of 4000 kilometres delivery registered in an overseas jurisdiction and is notification of recall mileage imported into Australia, it should be classified as a ‘used’ vehicle. This maintains consistency • Vehicle may not be fit for purpose for The AADA is of the view that the proposed with the registration requirements in the States Australian operating conditions (poor definition of a new vehicle (in respect and Territories.’ fuel quality, radiators, air conditioning to personal imports) is ‘inadequate and suspension, dust protection) imprecise’ and would need adjusting if barriers Other considerations raised in the submission are lifted. included a limit on the number of PIVs • Lack of spare parts and specialised service imported and regulation of ‘brokers and and repair facilities The objectives of the Motor Vehicle Standards agents.’ Act 1989 (the MVS Act) are: • Ability to insure the vehicle Ultimately however, it is hoped that barriers (a) To achieve uniform vehicle standards to restricting the personal importation of vehicles • Limited recourse against supplier and apply to vehicles when they begin to be into Australia remain as they are for the good limited protection under Australian first used in transport in Australia; and of consumers. Consumer Law; and (b) To regulate the first supply to the market To view the AADA’s full supplementary • Tradability of the vehicle of used imported vehicles submission, go to aada.asn.au.

automotivedealer.com.au | AUGUST 2015 | 17 FEATURES Australian Automotive Dealer Association NO QUICK FIX FOR 53 MILLION DEFECTIVE AIRBAGS

Dealers and motorists forced to wait for up to 12 months for replacement parts

News Limited CarsGuide Team Contributor

t’s the mother of all recalls - more than 53 The temptation is to provide the customer with Takata, which supplies 20 per cent of the car million airbags worldwide and 600,000 in a quick fix, but the executive director of the industry’s airbags, admitted in a recent US IAustralia. Victorian Automobile Chamber of Commerce, hearing this week the problem was more Geoff Gwilym, warns against any ‘attempt to widespread than it had claimed for years. The number of cars caught up in the world’s disable, deactivate or remove airbags’. biggest recall continues to balloon and the The faulty airbags, which can explode if sheer size of the recall means that some ‘Airbags are not a discretionary item of deployed in a crash, have so far claimed six Dealers are powerless to fix customers’ cars. equipment and cannot be simply turned off lives overseas. No deaths or injuries have been and on again. The mechanism is technically reported in Australia. The Takata airbag recall has dominated sophisticated and forms an important part of headlines around the world and highlighted the vehicle’s engineering.’ Legal experts say motorists have little choice the downside of an increasingly globalised but to endure the painstaking wait for the car industry. When a leading global supplier’s If the airbags in a car were deliberately replacements, and they can’t sue the car components fail, the fallout is spectacular. tampered with, the car would be deemed companies unless someone dies or is seriously Customers are left driving cars that are unroadworthy, he said, and any mechanic who injured from the defective airbags. potential timebombs and some manufacturers carried out the work could be liable. The crisis has left drivers with the unenviable won’t have the necessary parts to fix the ‘In addition to the legal implications, a problem until next year. task of taking the risk and driving their cars professional vehicle technician will not or — if they can afford it — park their recalled ‘Replacement parts are presently being deactivate airbags as they are aware of the risks car until new airbags become available. prepared and, due to the number of vehicles to the vehicle occupants,’ said Mr Gwilym. impacted globally, it is anticipated that So far, authorities in the US and Australia have sufficient parts will be available to commence Apart from the customer service and safety not ordered the recalled cars off the road. recall repairs by early next year,’ said Toyota’s ramifications of the Takata recall, there could media statement. be a flow-on effect on used car yards, as buyers The odds of being killed are difficult to are being warned to check if a car is subject to calculate. Not all of the airbags in the more Honda became the latest brand to announce a the recall notice before buying. than 53 million cars are defective. widening of the recall, adding 18,210 Accords made from 2001 to 2006 and 3030 MDX Dealers could be forced to park some used cars But internal testing by Takata over the past six family SUVs made from 2003 to 2006 to on their lots until parts become available. months found 265 of 30,000 recalled airbags the list of more than 20 popular makes and had ruptured — or less than 1 per cent. models. The majority of motorists and affected Dealers have no option other than to wait up to a year That may sound like good odds, until you Meanwhile Chrysler also increased the before the airbags are replaced - because the realise it still leaves 530,000 cars around the number of 300C sedans to be recalled locally, supplier at the centre of the crisis can’t build world — and at least 6000 in Australia — with from 4500 to 5500. them fast enough. airbags that could potentially kill.

18 | AUGUST 2015 | automotivedealer.com.au The car brands affected include Toyota, ‘If this happens, this could potentially make As the car industry is grappling with the Honda, Mazda, Nissan, BMW, Mercedes-Benz, the inflator assembly prone to rupture during biggest recall it has ever faced, some customers Lexus, Chrysler, Ford and General Motors. an accident, increasing the risk of injury to the are demanding replacement vehicles until the occupant.’ new airbags arrive. Adding to the recall drama, the car industry will struggle to contact owners of the affected Josh Simons, a partner from Thomson Geer, a ‘If the car has a major defect, you’re entitled to vehicles because most cars are no longer competition and consumer law firm, says there a replacement or a refund — at the customer’s with the original buyers, given that they are may be little action motorists can take now choice — depending how old the cars is,’ said Mr Simons. typically made between 2003 and 2007 and that the car companies involved have issued now on the used-car market. recalls. ‘If a customer wants a replacement or a refund At first it was thought only airbags fitted to it has to be a reasonable period of time from ‘Consumers now have an obligation to take vehicles with long term exposure to humidity the date the car was purchased new.’ reasonable steps to protect themselves, but were most at risk. car companies are not off the hook,’ said Mr However, the definition of a ‘reasonable period But this week Takata doubled the number of Simons. of time’ is open to interpretation and depends airbags recalled after determining humidity on the circumstances of the particular goods may not have been the only contributing ‘They must fix the product, and they may still involved, says Simons. factor. be liable if a death or serious injury does occur as a result of a faulty airbag.’ ‘If you bought a used car from a business, In the faulty airbags, the propellant in the potentially you have rights (to a replacement inflator deteriorates over time, making it Even then, however, car makers may not be or refund) against the business you bought the more volatile and prone to explode with too entirely to blame should the worst happen. car from,’ said Mr Simons. much force when deployed in a crash, blasting occupants with shrapnel. Given that the Federal Government must be ‘If you bought a used car privately, you have no notified of all recalls, Mr Simons says ‘it is up recourse against the person who sold you the Toyota believes the problem is caused by to the relevant minister to decide if the recall car, but you may still have rights against the car moisture intrusion into the airbag inflators. action taken is reasonable’. manufacturer.’

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fuchs.com.au PEOPLE. FEATURES Australian Automotive Dealer Association GENUINE IS BEST

The FCAI has launched a new website to make drivers more aware about genuine parts and why they should be the first choice for fitment

enuineisbest.com.au is the new online A quick look through the website reveals a AADA welcomes and commends FCAI’s resource for educating motorists about number of helpful resources for motorists. initiative in generating awareness through Ggenuine parts. There are simple definitions explaining the genuineisbest.com.au. difference between genuine, non-genuine, Developed and unveiled by the Federal parallel, counterfeit, salvaged and aftermarket Automotive Dealer has extensively covered the Chamber of Automotive Industries (FCAI), parts, as well as a simple six-point checklist perils of installing substandard parts, including the user-friendly website may incorporate for avoiding those that are not approved by the lack of guarantee from some insurers about bright colours and comical cartoons - but its manufacturers. how they notify drivers when using non- message is serious. genuine parts in repairs . The website also includes handy tips for ‘TheGenuine Is Best website equips Australians choosing the right insurer as well as a library Indeed, greater public awareness and with the information they need to help ensure of videos from different manufacturers education surrounding this issue will be key to they have genuine parts fitted to their car so demonstrating the lengths they go to ensuring more drivers choose parts that keep that it drives, functions and protects them when developing and testing new cars and their cars safe and running smoothly. exactly the way it was intended to by the car motorcycles. maker,’ explains Tony Weber, FCAI chief executive.

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20 | AUGUST 2015 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association CONSUMER GUARANTEES VS MANUFACTURER WARRANTIES

Evan Stents Consumer guarantees are completely period of time covered by a manufacturer’s separate and distinct from the ‘traditional’ warranty. This means that consumers may be Lead Partner, manufacturer’s warranty. The ‘traditional’ protected against repair costs by the ACL even Automotive Industry warranty is a voluntary, private contract if they are outside the period of time covered Group | HWL between the manufacturer, the Dealer and by a manufacturer’s warranty, or if they have Ebsworth Lawyers the consumer. It is usually a promise made to breached the terms of their manufacturer’s the consumer that a Dealer will fix or replace warranty. This is consistent with the industry a part for free for a limited period of time guide to the Australian Consumer Law or a certain number of kilometres and it is published by the ACCC, which states, among conditional on the consumer obeying the other things: specific conditions of the contract. here has been long standing confusion ‘Warranties against defects may set out and debate regarding how ‘traditional’ This distinction between consumer guarantees requirements that consumers must comply with. Tmanufacturer warranties coexist and manufacturer warranties is very important For example, a warranty against defects on with consumer guarantees (or ‘statutory for both suppliers and consumers. a motor vehicle may require the consumer to warranties’) granted under the Australian ensure any servicing is carried out: Consumer Law (ACL) and previously under Whether a consumer has breached the terms the Trade Practices Act. The confusion has of a manufacturer’s warranty depends on • by qualified staff been exacerbated by the added requirement the terms of that voluntary, private contract. imposed by the ACL on manufacturers For example, it is a common term of a • according to the manufacturer’s specification to include a specific statement in their manufacturer’s warranty to require that a • using appropriate quality parts where ‘traditional’ manufacturer’s warranties about vehicle be serviced by an authorised Dealer. required. the ACL guarantees. This article focuses In that case, having the vehicle serviced by on explaining the difference between the an independent repairer may well breach the A warranty does not change your responsibilities two kinds of warranties and removing any manufacturer’s warranty. under the ACL. The consumer guarantees apply confusion which persists. in the same way regardless of whether a vehicle However, a breach of a manufacturer’s is covered by a manufacturer’s warranty, an Consumer guarantees imposed by the ACL warranty does not invalidate a consumer express warranty or an extended warranty, or are unavoidable obligations on, among others, guarantee or statutory warranty granted under whether those warranties have expired.’ all suppliers of motor vehicles and vehicle the ACL. For the purposes of the consumer components to guarantee the performance of guarantee granted under the ACL, it also does The ACCC industry guide can be accessed on those goods. not matter that a vehicle or part is outside the the ACCC’s website.

Dealers may be liable under the ACL to repair, replace or refund money paid for a vehicle or a part under the ACL even where there is no manufacturer’s warranty, or the manufacturer’s warranty has expired. Dealers must also ensure that they do not make any representation about ‘warranties’ generally (for example, in promotional material’) that is capable of being construed as a misleading representation about consumer’s rights under the ACL. Consumer guarantees are a current enforcement priority area for the ACCC, especially in the context of the sale of extended manufacturer warranties by motor vehicles manufacturers and Dealers.

If you have any questions or require further information, consult your professional advisors.

automotivedealer.com.au | AUGUST 2015 | 21 FEATURES Australian Automotive Dealer Association WHO OWNS THE GOODWILL IN MY DEALERSHIP – DEALER OR MANUFACTURER?

Vinesh George Company Secretary and Legal Counsel, AADA

n franchise relationships, concern often arises about who owns the goodwill of a Ifranchised business. On the one hand, you have a Dealer who has put many years (or even decades) of blood, sweat and tears into building up the dealership from scratch. That includes substantial investment into the facilities and people involved in the business. It also involves the Dealer risking all of their personal assets by ‘goodwill’ and it is commonly understood and ‘Goodwill is inseparable from the conduct of means of personal guarantees made in favour recognised as belonging to the Dealer. a business’ implying the franchisee owns the of banks. goodwill. Many Dealer agreements specifically state Then on the other hand, you have a that the manufacturer retains ownership of Another stated: manufacturer who has not only made the the goodwill attaching to the brand. In most product through decades of investment in cases, this is a reference to the goodwill of the ‘However, the franchisee has an interest in R&D, but also invested millions of dollars in brand and the franchise system, as opposed protecting the goodwill of its business. The developing and building a brand from which to the franchised business. In some cases, customers are customers of the franchisee’s Dealers benefit. the manufacturer will go further and assert business’. that a Dealer only has a custodial role over How do you allocate the ownership of Those statements made by judges in the course the franchised business and the Dealer is goodwill between these two competing of handing down judgements offer a useful required to return the franchised business interests? insight and reminder about who owns the to the manufacturer at the end of term. A goodwill in a dealership. In the automotive and franchise industries, manufacturer cannot have any degree of one should consider that there are two types of confidence in the latter statement in light of When it comes to protecting the goodwill goodwill. some of the legal commentary referred to of their businesses, Dealers ought to adopt below. a somewhat confident attitude in relation First, there is the goodwill that attaches to to their rights. Manufacturers would be the branding/trademarks. That is commonly There are a number of cases in Australia, the well-advised to be aware of these rights when understood and recognised as belonging to the United Kingdom and the United States that developing operational or commercial policies manufacturer. have discussed the issue of who owns the that affect the goodwill of a dealership and goodwill in a franchised business. In most when considering exit arrangements for a Secondly, there is the goodwill that attaches instances, the discussion supports the notion Dealer. to the franchised business. That goodwill that the franchisee owns the goodwill in the arises for accounting purposes when a sale of franchised business. For more information, or if you’ve any questions a business takes place at a price which exceeds about this article, you can contact Vinesh the value of its net assets. That excess is called For example, one judge stated: George by emailing [email protected]

22 | AUGUST 2015 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association GOODWILL - WHAT IS IT, WHO “OWNS” IT AND HOW IS IT VALUED?

Mark Ward Regardless of the terminology used, we reflect in the capitalisation rate (multiple), essentially arrive at the same meaning. which then reflects in the value. Let’s save Partner, the value debate for another time, my Automotive - BDO Who ‘Owns’ The Goodwill point is that market values of goodwill are negotiated and paid without the need for Now we are getting into a potentially the manufacturer consent to the goodwill contentious area. The contention is generally value. he questions seem straightforward, borne out of the franchise model under which but when the rubber hits the road the manufacturers and Dealers operate. The c) Dealership businesses are invested in, Tthe answers are quite complex and article written by Vinesh George which is operated, traded and financed on the potentially contentious. also published in this edition of Automotive assumption that there is a value attached to Dealer addresses this topic. Vinesh makes goodwill, regardless of whether that value Let’s leave the question of how goodwill is valid observations with respect to whether the is notional or reflects an actual transaction. valued for deliberation in future publications. manufacturer or the Dealer should rightfully To express that another way, consider In this article we will briefly explore who own the goodwill and concludes by noting that how the dealership model might look if ‘owns’ the goodwill, the manufacturer or ‘Dealers ought to adopt a somewhat confident shareholders/potential purchasers had the Dealer (or even potentially the property attitude in relation to their rights’. no prospect of a capital return. And what owner). might that mean to financiers with respect BDO agree entirely with this view that the to their appetite to loan funds for dealership But first, in order to consider who owns the goodwill is ‘owned’ by the Dealer for reasons businesses and facility investment? goodwill we must define what goodwill is. which are underpinned by a commercial application of the franchise relationship, rather Recently, we have observed manufacturers What Is Goodwill than the potentially legal interpretation of the terminate franchise agreements, as is their franchise agreement itself. right under many franchise agreements, when Putting aside some definitions of goodwill a dealership business is subject to external which refer to an act or attitude of kindness or Together with the points raised by Vinesh, appointment such as a receivership. In these friendliness, we can either refer to accounting BDO’s reasoning follows: circumstances any notional or actual value jargon or layman’s terminology to define which might have attached to goodwill is goodwill in the context of business value. a) Despite the fixed term of franchise immediately diminished to nil, obviously agreements, Dealers as a matter of necessity, to the detriment of financiers, shareholders, Accounting jargon defines goodwill as an conduct their businesses as if there is employees and other creditors. intangible asset that arises when a buyer no end date. A Dealer’s anticipation of acquires a business and pays an amount business longevity is obvious if you reflect Imagine then the behaviour of these greater than the fair market value of the on the considerable investment and effort stakeholders if we extended the notion that tangible assets. While goodwill is quantified dedicated to customer satisfaction and dealership businesses could not be attributed and recorded in the accounting records, retention. It is particularly evident when a goodwill value – even under normal trading when a transaction takes place most business you observe the significant investments circumstances. Reflecting on item c) above, if owners expect that there is an inherent value that occur in respect to facilities, which for the prospect of capital growth was taken away, of goodwill which attaches to the business, most are fit for few other purposes than it would undoubtedly change the inclination of regardless of whether it is recorded in the operating a motor dealership. stakeholders to invest in, operate or finance a accounting records or not. What’s more, where dealership business. the amount is recorded in the accounting b) Dealership buy/sell transactions are records, it is recorded at historic cost and negotiated between parties similarly to In the next edition of AADA’s Automotive accordingly may not reflect the present fair businesses outside of the franchise model. Dealer we will consider how a dealership is market value of the goodwill. The exception is that the manufacturer valued. must approve the purchaser (although A layman may use terminology to define the they cannot reasonably withhold approval) For more information, or if you’ve any goodwill of a business, which might sound and additionally some manufacturers have questions about this article, you can contact something like, the value of the positive requirements regarding equity participation Mark Ward, Partner, BDO Automotive by reputation of a dealership business which of the Dealer Principal. These manufacturer emailing [email protected] supports the continued patronage by requirements simply reduce the ‘liquidity’ customers. of a dealership business which will likely

automotivedealer.com.au | AUGUST 2015 | 23 FEATURES Australian Automotive Dealer Association HOW BRIGHT IS THE FUTURE FOR ELECTRIC CARS?

Charles Bayer What that reflects is the investment we’ve (Melbourne), but we’re in a display area really. made in infrastructure. We’ve now got three It’s nice to be able to introduce people to the Contributor stores in place and we’re building a super vehicle at Chadstone, but then for a more charger network as well. We’ve got one super one-on-one and better service provision, we’re charger out the front here in Melbourne, and able to bring them [to Richmond] and give then we’ve got two in Sydney. By the end of them greater time allocation. We’re running 2016 we’ve committed to go to Brisbane and test drives from both locations and the owner just north of Brisbane, which means that we’ll response has been great. here’s been a lot of discussion about have connected all major cities on the east electric vehicles (EVs) and it often seems coast by the end of 2016. CB: Why is the traditional dealership model Tto be focused on the negative; range wrong for Tesla? anxiety, slow sales growth, battery reliability CB: How would you describe the internal and the overzealous predictions of its future culture at Tesla? HW: I think there are just barriers to selling by some economists, political leaders and an electric vehicle. We’ve built a car from the forecasters. HW: It’s great. The one thing that probably ground up. Traditional Dealers are trained sums it up is we operate a bit like a start-up, in certain benefits of an internal combustion But according to Heath Walker, the Marketing and even though we’re the size we are globally engine. We have to flip that on its head and and Communications Manager for Tesla now we still have the flexibility, the lack of show the benefits of owning an electric car Motors Australia, the future is bright for bureaucracy. We want to remain flexible and of which there’s multitudes. The convenience electric cars and you only need to take a look always customer-first. So everything that we factor alone is a huge one, and I think being at the tech to see why. do we think about our owners before making able to train staff up and have them deliver any decision. CB: Do you think the sales expectations of exactly what you need said is important. EVs have been hyped up too much? CB: How have people reacted to the opening Overcoming preconceived barriers is key of your Richmond location? for us. We also have a mentality of ‘customer HW: No I don’t think so. I think certainly first’, and a single customer view. We want to the media have reported that there are some HW: It’s been an exciting time for us. Our know what’s happening with that customer hurdles associated with electric vehicles. We owners now have a location where they can throughout their whole journey. So when don’t actually report on sales figures as other charge and also have their cars serviced. you come into a store we provide you with companies do, but we are very excited about a product specialist. They take you through the response we’ve had in Australia to date and From a store point of view we’ve not got a the car and educate you on the car. They moving forward. physical location. We’re out at Chadstone hand you over to an owner adviser who then explains what it’s like to own the vehicle and take you on a test drive. We then transition you (if you purchase the vehicle) to a delivery specialist. They meet with you for coffee, a bit like a friend from the store who updates you on what’s happening with your vehicle prior to delivery, and then walks you through the delivery process once you take the car. And then finally we hand over to the service team who essentially become your key contact during ownership. If there’s ever an issue with the car they’re able to assist you with it, and are there when you want to take your annual service, should you choose to take one. By owning this process we can ensure that each part is delivered at its optimum level, and I think with a dealership model that can be broken at any stage. Heath Walker and yours truly 24 | AUGUST 2015 | automotivedealer.com.au CB: Did you look at the traditional dealership model before you embarked on selling your HOW BRIGHT IS THE FUTURE vehicles? HW: In the US they did look at that model and saw so many hurdles associated with it. FOR ELECTRIC CARS? We wanted to provide a unique experience. We think of ourselves as a tech company first and Tesla S ‘Skateboard’ rolling chassis with integrated battery pack an auto company second. Our biggest hurdle is getting enough cars made to pull the wait time down, but it’s also all customised, which is why we offer the online component as well. So we can educate in-store, but because there’s no commission set through a third party we don’t have to pressure someone into making a decision on the showroom floor. We can allow them to go home, sit on their couch and go through the process of ordering on their computer and ultimately make a comfortable decision in their own home.

CB: What’s the first thing a potential customer says when they walk into your store?

HW: It’s usually one of three things. They usually say ‘how much?’ And then ‘how far’ and ‘how do I charge it?’ Tesla Model S premium performance AWD sedan

CB: Do you think the Australian Government it’s better on the environment, especially if CB: Can a qualified electrician set the whole or the State Governments should be you’re using green energy or solar when you’re thing up? subsidising EV buyers? charging up at home. In terms of an audience, HW: Any electrician can do it, and if someone HW: Definitely. If they want this technology to we’re getting an older audience, pre-retiree. So doesn’t have a local electrician that they be taken up in the short term, it’s been proven those that are still working, but probably want know or trust we can put them in touch with that subsidies assist that. All you need to do is to spoil themselves one last time before they someone in their area. look at countries like Norway which tax petrol retire and still have a car that has the ability to fulfil their everyday needs, whilst having a bit cars and subsidise electric vehicles. In fact, CB: The lifespan of a Tesla battery? the Model S has been the number one selling of a sports car to the side. car there for months on end, and then you HW: We’ve got an eight year warranty on the CB: Male or female? look at a place like California. It’s incredible battery and drive train – unlimited kilometres. to see the uptake of electric vehicles based on HW: We’re heavily skewed towards males We say after around eight to 10 years if you the subsidies, but also the benefits. It doesn’t treated the battery as poorly as you could always have to be monetary. There’s some easy at the moment, and I don’t think it’s due to disinterest in the vehicle from females. It’s just possibly treat it, you’d be looking at around 70 wins that state governments can do to assist, to 75 per cent capacity still left in the battery because a lot of the rebates would have to be due to knowledge, and that’s where my role after that lifetime. So that’s 25 to 30 per cent either high-end state or Federal based, but comes in. I’ve got to create a greater awareness degradation on a battery. So again one of the there’s things such as reduction of tolls [for EV of what Tesla is and what Model S is. hurdles that we face is education. We get asked Drivers], use of the transit lanes and parking how much it is to replace a battery. We don’t infrastructure so that low impact cars can park CB: When the customer takes a Tesla for a test closer to the store fronts. drive, what’s their first impression? like to give that figure out for two reasons. One, it’s under warranty for eight years so you CB: Your typical customer wants...? HW: We have this thing called the ‘Tesla grin’, don’t need to worry about it. And secondly in and that’s usually what occurs. eight years’ time battery technology is going HW: Performance, surprisingly, is probably the to change so much and the efficiency of cost highest driver for coming into the showroom. CB: Is it costly to install a charging station in is going to come down so much that we’ll be Second is technology, and I’m not talking my home? talking about a completely different figure. just about technology in the car but the way it drives and handles. The reviews have been HW: No, what we do is provide the wall CB: Finally, describe Elon Musk in three very favourable to date, and the last is the EV unit at no cost and then the install can vary words credentials. So the ability to drive a car and feel depending on your electrical setup – on good about yourself when you drive it because average it would cost around $1000. HW: Inspiring, clever and innovative

automotivedealer.com.au | AUGUST 2015 | 25 FEATURES Australian Automotive Dealer Association OUT WITH THE NEW AND IN WITH THE OLD

For the first time ever, older cars are selling better than new ones in China

sed car sales in China have been ‘It depends on the buyer’s budget, but generally Accompanying this phenomenal growth in growing faster than new car sales and speaking Chinese love to buy large sedans and used car sales is the rise in Certified Used Car Usome observers are predicting that by SUVs, and mostly locally built foreign brands programs offered by dealerships. CADA has 2020 used cars will account for half of all auto such as Volkswagen and BMW.’ recently developed a national standard for sales. the testing of used cars which it is rolling out Chinese used car buyers also prefer their cars nationally. Why the sudden upsurge in used cars? The to be grey or black with lighter or brighter main reason is availability of stock – until a coloured cars generally taking longer to sell A recent report stated that half of Ford’s few years ago the Chinese motor industry according to one used car dealer quoted in a 500 dealerships have been approved to sell was simply too young to have enough older recent online article on used cars. ‘certified’ used cars that come with warranties. vehicles. The company has also opened a number of While used cars are not considered an dealerships selling only second hand vehicles. According to Mr Alan Wang, the International expensive investment, first car buyers Representative of the China Automobiles generally prefer to buy new cars. In megacities With a used car market anticipating sales of Dealers Association (CADA), the rapid growth like Beijing and Shanghai, there’s a general 20 million vehicles over the next five years in the new car market over the last 10 years preference to use finance companies to fund things are certainly looking positive for used has meant that owners are now trading out of new vehicle purchases. car buyers and used car sellers in the world’s their old cars. Prior to this there were very few largest car market. second hand vehicles available. Furthermore, Unlike Australia where most used car buyers Mr Wang expects used car sales to increase by visit a dealership or buy privately, our Chinese 20 per cent in the next financial year. counterparts shop at mega-dealerships or multi-story auto malls, and according to Mr What type of car does the typical Chinese used Wang: ‘Nowadays, they can also buy a used car car buyer look for? from an online auction platform.’

26 | AUGUST 2015 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association IS GEORGE SOROS LOOKING TO JOIN THE CAR CLUB?

Reports suggest that talks are well underway between business magnate George Soros and major dealership groups

irst it was computer tycoon Michael Dell and the former President of Sonic FAutomotive, Jeffry Rachor, who entered the retail automotive business.

Then, Edward Lampert and Bill Gates bought into AutoNation – the United States’ number one dealership chain. And most recently, billionaire Warren Buffett purchased the Van Tuyl chain of 78 dealerships through his company Berkshire Hathaway.

Closer to home American billionaire Roger Penske recently signed a deal with MTU Detroit Diesel and V8 Supercar Team Dick Johnson Racing.

Now people are speculating that billionaire George Soros wants to travel down the same road and buy a large US retail automotive group after two of his executives were spotted meeting with Dealers at NADA in San Francisco earlier this year.

For those who are not familiar with George Soros or his business dealings, he is a Hungarian-born American businessman, investor, and philanthropist.

He is the chairman of Soros Fund While profit margins in retail automotive are On the other side of the coin, OEMs are not Management which is currently in talks with getting slimmer, helped in part by the price that enamoured with Private Equity funds an undisclosed number of dealership groups. transparency provided by the internet, ‘cash owning dealerships as in the past they have flow is (still) king!’ thanks to new and used car tended to buy-in then load up the ‘shop’ with Soros is also known as ‘The Man Who Broke sales, service, insurance and finance. debt only to off-load them down the track. the Bank of England’ because of his short sales of US$10 billion worth of pounds, giving Furthermore, industry observers say that large Also, corporate taxes in the US are as high him a profit of $1 billion during the 1992 numbers of vehicles will be coming off lease as the costs of funding vehicle inventories Black Wednesday UK currency crisis. He is, in the next few years which means owners will and dealership renovations requested by unsurprisingly, one of the thirty richest people automakers. in the world. need to replace them with new models. While some may argue that Soros doesn’t So what’s the big attraction for Soros in buying Then there’s the security of Dealers’ PMAs have the necessary skills and experience to dealerships? which in the US are protected state laws. successfully run a large dealership group, he Firstly, automotive dealerships represent a Another bonus for Soros – and other cashed- may follow Warren Buffet’s lead and leave the unique opportunity for Soros to diversify his up investors, is that dealerships are relatively original management team and culture in fund’s holdings and boost his cash flow. easy to buy, although much harder to run. place to do what it does best.

automotivedealer.com.au | AUGUST 2015 | 27 FEATURES Australian Automotive Dealer Association MIXED RESPONSE TO BRISBANE AUTOMALL

Penned as a ‘World First’ the proposed multi-million dollar dealership mall and test track at Brisbane airport could have varied outcomes for Dealers

Adding to the excitement, the test track (note: But it’s not all necessarily good news for not a race track) has been designed by V8 Dealers. Supercars and Bathurst 1000 champion Mark Skaif. Dealerships are given the responsibility to service a particular Prime Market Area ‘Having the ability to test drive a new vehicle (PMA) - that is the zone in which Dealers along a track is such a unique concept and are guaranteed competing dealerships something I am really excited to be a part of,’ (representing the same manufacturer) cannot Mr Skaife said. directly market. PMAs are crucial to the dealership business – not only do they help ‘Being able to drive a car straight from the ensure fairness; but that the Dealer’s substantial showroom on to a purpose-built test track investment in the franchise has a better chance without having to wait at traffic lights and sit in of being returned. congestion is fantastic. You don’t even have to be a car fanatic to appreciate that.’ The Brisbane AutoMall will fall within a number of established Dealer PMAs already Skaif goes even further, describing the operating in the proposed site’s radius. This advantages of the layout for Dealers: creates a number of potential issues, the severity of which depends on the individual ‘It’s a unique way for customers to try out a Dealer. Some business owners who are forced new vehicle and a great way for dealerships to to relocate risk losing substantial sums of really sell the features of their cars. Having a range of dealerships and associated services at money invested into their existing facilities at the one central precinct is just what Brisbane the request of the manufacturer. needs.’ On the other hand, those that choose to remain in their current location could be at risk of utoMall is a grand concept that, if Naturally, these sentiments are echoed by BNE having their PMAs compromised by new and completed, could have a significant Property managing director John Tormey competing dealerships developed at Brisbane’s impact on the Brisbane automotive who sites the benefit of a single shopping A airport – in breach of their PMA agreement. scene. Though it’s being heralded as a destination: revolutionary development by Brisbane Because the AutoMall site is on commonwealth Airport Corporation’s property arm BNE ‘It makes a lot of sense for a modern city,’ Mr Tormey said. leasehold land, the Brisbane Airport Property, there are a number of potential Corporation does not need council approval pitfalls for Dealers that are already operating in Meanwhile, Brisbane Airport Corporation to begin development. However, the AADA the region. chief executive officer Julieanne Alroe, suggests is concerned that existing arrangements and that the AutoMall will help relieve congestion long term planning could be put at risk by this If you haven’t heard, AutoMall is to comprise from within the busy streets of Brisbane’s development if the aforementioned concerns of a large test track surrounded by facilities for Fortitude Valley – where many dealerships are are not addressed. dealerships and other car-related businesses. currently dispersed. A 50 hectare site has been reserved for For now though, the Brisbane Airport the development at the airport which is ‘Having an automotive precinct at the airport Corporation is still on the hunt for a joint expected to become Queensland’s premier frees up prime real estate in the inner city venture partner to assist in the development of destination for new model launches, driver- areas,’ she said. this multi-million dollar concept. training programs, car yards and new car fleet launches. The site sits opposite Brisbane’s ‘And it provides further options for developers What are your thoughts on the AutoMall? International Terminal – between Airport and residents and space for our cultural Share them with us via Drive and Moreton Drive. precincts to prosper.’ [email protected]

28 | AUGUST 2015 | automotivedealer.com.au FLOORING, WALL PANELS AND BULKHEADS FOR COMMERCIAL VEHICLES

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They are made from ABS, a high grade plastic, with a fabric lining and wide glass windows. automotivedealer.com.au | AUGUST 2015 | 29 FEATURES Australian Automotive Dealer Association AADA’S ALL-NEW NADA STUDY TOUR: NOT JUST BUSINESS AS USUAL

A totally redesigned and re-imagined tour for 2016

ever before has the AADA NADA The Convention agenda also features over 80 In between sessions you will be able to stretch Study Tour been so focused on Dealer-centric workshops, presenting the latest your legs and stroll the expo floor where you’ll Nrewarding delegates with an strategies and solutions to help you achieve see hundreds of exhibitors showcasing the unforgettable global automotive industry solid growth and sales in 2016 and beyond. latest equipment, services and technologies. experience. That includes the opportunity to Topics to be covered include marketing, partake in the most exciting and glamorous finance, insurance, government, used cars, Another unforgettable experience will be dining, entertainment and networking incentives and social media (just to mention the Friday night dinner at the stylish Dal opportunities only a fantasyland like Las Vegas a few). Toro ristorante with its multi-million dollar can offer. supercar showroom and gallery. Not only Another bonus for AADA tour delegates will guests savour the finest Italian cuisine Considered the ‘Automotive Industry Event of will be the journey to one of Nevada’s most and wines, but you’ll also have an unrivalled the Year’, NADA Conventions typically draw successful dealerships on Thursday morning, opportunity to meet Bill Fox, the NADA 20,000-plus delegates, including auto dealers, where delegates will have the chance to Chairman after his official opening of the managers, manufacturers, allied industry gain insight into their key profit centres, evening. executives, exhibitors and members of the operating procedures, sales game plans, online media from around the globe. marketing and more. In addition, there will be an international NADA is also renowned for presenting some forum of leading industry figures from of the world’s highest profile keynote speakers Thursday afternoon will be your first the International Dealer Association such as Jeb Bush, the former Governor of opportunity to visit the Las Vegas Convention Working Group (IDAWG) including USA, Florida, Hilary Clinton, the former First Lady Centre and attend up to three inspiring Brazil, Australia, China, India and Canada and front runner for the 2016 Democratic workshop sessions featuring some of the participating in an interactive panel discussion presidential nomination, as well as Jay Leno, industry’s most influential leaders and on the many challenges facing the global auto acclaimed late night TV show host and stand- speakers. industry. up comedian. There’s also an official AADA workshop which Of course, a range of wonderful Las Vegas And you can rest-assured that the 2016 line-up is an exclusive opportunity available only to entertainment to wrap-up the evening is will be equally impressive. Corporate Blue guests. included too.

30 | AUGUST 2015 | automotivedealer.com.au These are just a few of the highlights of this all- NADA 2016 AADA STUDY TOUR • Welcome dinner at classic French bistro, new NADA 2016 AADA Study Tour presented HIGHLIGHTS: Mon Ami Gabio by Corporate Blue – one of Australia’s foremost boutique corporate agencies. • Duration – 4 days: Wednesday March 30 to • 80-plus NADA workshops to choose from Sunday April 3 Just in case you were wondering you’ll have • Complimentary shuttle bus service to plenty of time to relax and engage with old • Location – Las Vegas Nevada and from the convention centre every 10 colleagues too. Not to mention the chance minutes to make new connections as you enjoy all • Friday night dinner at Dal Toro ristorante • World’s biggest auto industry trade expo that Las Vegas is famous for, including those • Meet NADA Chairman, Bill Fox and flashing lights on the Strip. participate in a panel discussion with • Cocktails at the Vegas hotspot, The Chandelier Bar at The Cosmopolitan For those wishing to extend their stay, your leading industry figures from IDAWAG AADA host can arrange for you to see the • All NADA registrations, satchels and tags • Grand finale dinner at the highly acclaimed Hoover Dam by helicopter, fly over the provided Trevi, Las Vegas spectacular Grand Canyon by plane, coast over the desert in a hot air balloon or tear up the • Nevada auto dealership tour • Opportunity to visit top Nevada tourist Mojave in a dune buggy. spots • AADA exclusive workshop Whatever you choose to do, your AADA host To find out more, or to secure your place before will be there to assist you with all post-NADA • All airport transfers by private coach places begin to fill, contact Terence Harris at planning, transfers and even lunch and dinner [email protected] or Linda Millard recommendations, as well as your departure • Luxury accommodation at the French- at [email protected] or call transfers for return flights to Australia. themed Paris Las Vegas casino and hotel 03 9578 6555.

automotivedealer.com.au | AUGUST 2015 | 31 FEATURES Australian Automotive Dealer Association WOULD YOU BUY MR OTAKI’S 2013 TOYOTA CROWN?

Buying a Japanese used car can be a risky business

Charles Bayer From a marketing point of view, it raised Faded paint is another issue which is often my curiosity and encouraged me to visit only revealed after the vehicle has been blasted Contributor the company’s website to check-out their with a high-pressure hose. inventories of second-hand earth moving equipment and used cars. Slight scuff marks and dents are expected when buying a used import, but irregular While the previous issue of Automotive Dealer panel gaps indicate that the car has been dealt with the key reasons why consumers involved in a major accident. colleague recently received an could be left with a vehicle that looks nothing unsolicited email from the General like its internet photos (if the Government AutoSpeed.com also say that high end Toyotas AManager of a Japanese trading company were to remove personal motor vehicle import fitted with the optional airbag suspension offering him a 2013 Toyota Crown described restrictions), there are more basic reasons why systems are prone to sagging and are expensive as ‘the best ever car in my life and will be the a buyer should act with caution. to repair with second hand systems (which rest of my life for sure.’ tend to suffer the same problem) – that is of According to AutoSpeed.com some of the course, if you can find one locally. In addition to some brief details on where more common problems found in used the company markets its vehicles and why Japanese imports – especially late-model Buyers should also be aware that many of the Toyota vehicles ‘attract thousands of people performance cars, include rust caused by cheaper imported cars have sketchy service at exhibitions here in Japan’, the email also heavy snowfalls in northern Japanese cities histories which are not revealed at the time of contained links to a glossy Japanese website such as Nagasaki, Hiroshima and Kyoto. purchase. featuring the Toyota Crown Athlete and a lengthy YouTube video of Mr Otaki’s vehicle Snow also rusts disc brakes which may require So before you start a transaction with a faceless which has generated over 145,150 views and the replacement of all four discs and pads once seller on the internet, remember that your 109 comments to date. the vehicle has arrived in Australia. import will arrive without: An ANCAP safety rating, ADR compliance, manufacturer’s warranty and limited protection under Australian Consumer Law.

32 | AUGUST 2015 | automotivedealer.com.au

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Shell Helix is a trademark of Shell Brands International AG. PROFILE Australian Automotive Dealer Association “I’M A GYPSY,” SAYS NOEL GOULD, OWNER, SWAN HILL AUTOMOTIVE GROUP

Who inspires you? Why aren’t there more female sales I’ve been inspired by Paul Keating and Adam consultants in the industry? Goodes who I think is an exceptional person. Well we have two exceptional ones in Swan Hill. In our dealership of 36 people, we have How many dealerships have you owned? 14 females, which I think has been something 13. of a record. That’s almost 40 percent of our What are you passionate about? staff. Also, we didn’t do it by design, it just Watching the Sydney Swans win, playing golf happened that they were the best applicants and spending time with my family. for the various jobs we were looking to fill. We have them in every department and I think What does it take to run a successful it’s made a hell of a difference to the way the dealership? business runs. Capital, location and product. Your favourite travel destination is? Of the three franchises you now own, France. which brand is the most popular with your customers? What have you learned about yourself over your career? aving owned numerous dealerships in In Swan Hill we sell more Holdens than That I’m a gypsy, I can never settle in one spot. Melbourne and regional Victoria during anything else. Hhis long and successful career as an auto The first car you ever owned was? dealer it is easy to see why Noel’s profile is up Is there a special relationship between a Dealer and his local community? An FX Holden, a black one. The registration there with some of the biggest names in the number was RM-828. industry – thanks in part to Noel’s outgoing Absolutely. personality and his preference for starring in How do you foster that? Can you remember your first sale? his own TV commercials and voicing his own We sponsor several football teams, bowling I may not remember the first sale, but I recall radio spots. After briefly stepping out of the clubs and the race club. my brother-in-law who was in the Defence industry to run his own consultancy, Noel is Force recommending his lift driver to buy a back ‘in the game’ with his purchase of Swan If you weren’t a Dealer, you’d be? car from me. And I suffered from asthma in Hill Holden, Swan Hill Nissan and Swan Hill A lawyer. But I’ve always considered law as those days and my wife had to drive me to Ford. His story makes fascinating reading. common sense. You can usually work out Dustings in Burwood. She drove me there and what is a fair legal outcome if you just apply I did the deal and she drove me home. So I’ve How long have you been selling cars? common sense. always remembered that one. Since late ’54. You’ve always wanted to own? In three words, describe Noel Gould. Where was your first job? A house in Port Douglas. Show-off. Amiable. Passionate (about my It was in my home town of Rainbow, with a sporting interests). Holden dealer, Strauss Brothers. What does Noel Gould do to relax? I play golf and enjoy lunching with family and What issues do you think the AADA should What made you choose a career in the friends. be tackling on behalf of Dealers? automotive industry? I think a fair go for the Dealers. In particular, It actually chose me. I was crossing Federal What are you looking forward to? what manufacturers expect in terms of capital Street, Rainbow, and Jack Strauss - who Mentoring a successful Dealer Principal in my expenditure on dealerships, particularly the became a wonderful friend and mentor of business. ones that have lost market share. mine – approached me and said ‘What are you doing next year, Noel?’ and I said ‘I’m going to What was the biggest disappointment of Finally if they were going to make a movie work for the Austin Dealer.’ He said ‘Bullshit. your life? about Noel Gould, who would you like to He’s not much of a Dealer, come and see me.’ The 2006 premiership when we got beaten by play you? a point. George Clooney or Richard Gere What’s the major thing that has changed – but, probably Boris Karloff. since you first started selling cars? What’s the most challenging aspect of There’s more of an emphasis on treating the running a dealership? customers better, and the computerisation of Finding the right people, nurturing them and the industry has just been dramatic. getting them to do the things that they should do. SHIFT YOUR DEALERSHIP INTO TOP GEAR

NADA UNIVERSITY COURSES TO BE HELD ACROSS THE COUNTRY SERVICE DEPARTMENT SALES OPERATION SALES OPERATION OPERATIONS MANAGEMENT MANAGEMENT I MANAGEMENT II Three day course Two day course Two day course $3850 inc GST $1650 inc GST $1870 inc GST Course aims include . . . Course aims include . . . Course aims include . . . • Maximise customer retention • Complete evaluation of sales and • Managers to be better coaches • Maximise profits F&I profitability • To hold better and more energetic • A specific plan for sales growth sales meeting FOR MORE INFORMATION, COURSE DATES AND LOCATIONS . . .

PHONE: 07 3237 8777 // EMAIL: [email protected] // WEB: WWW.AADA.ASN.AU FEATURES Australian Automotive Dealer Association TRAINING MATTERS: NADA COURSES HIGHLIGHT POTENTIAL FOR PROFITS

The roll-out of the National Automobile Dealers Association (NADA) University courses is continuing apace with several dealerships signing up to take advantage of the specially-designed programs

ollowing the delivery of the first Service ‘It really opens your eyes to different ways to Jennish went on to add that ‘it was very useful Department Operations Management look at your business and get down to the nuts to use our own figures. Using them meant FCourse held in March in Tasmania, and bolts of everything,’ said Andrew. ‘With you could see what your actual results were focus switched to Brisbane and delivery of the training being over three days it allowed us and [we] could then compare and discuss the second Service Department Operations to take the time to really stop and look at the why you might have a good or bad result. The Management course, this time held at the business… that in itself is invaluable. opportunity was there to discuss it and really Motor Trades Association of Queensland understand what the numbers mean.’ (MTAQ) offices at The Sir Jack Brabham And a lot of the things we looked at - such as Automotive Centre of Excellence. workshop capacity, staffing capacity, service According to Andrew, the trio were keen to advisor capacity – we now have the skills to immediately take what they had learned back Thecourse, designed to show how dealerships look at in a different light. In fact, on each of to their business. can maximise customer retention, maximise the three days there was something new that I profits and secure business back from took away that I think will help us to improve ‘We were talking in the car park as we left and independents, was delivered to staff from our business.’ have already planned a meeting to run future Oldmac Mazda Group, based in Queensland’s figures through what we have learned,’ he said. capital. Thethird member of the group was Jennish ‘Now we have this extra information, this extra Guandar, Financial Controller for Oldmac knowledge, we’ll use it!’ Theintimate group of participants were as Mazda. Having Jennish participate in the enthusiastic about the course and its detailed course was something all three found very The Service Department Operations look at the workings of the service department useful. ‘It was very interesting,’ she said. Management course was specially tailored – including analysis of financial statements, by industry experts from the Australian sales, expense, forecasting and pay plans – as ‘There were a number of things I learned Automotive Dealer Association (AADA), the their Tasmanian colleagues. that showed a different way of looking at the NADA, and the course provider in Australia, figures. And to get the Service Managers’ point the MTA Institute of Technology, and was ‘I really gained a lot from the course,’ said Ray of view, as well as help them to understand delivered by NADA-accredited consultant Stewart, a 32-year veteran of the industry who their numbers . . . that was really good.’ Kim Haywood. has been a Service Manager with Oldmac Mazda for 14 years:

‘I’ve come back with at least half-a-dozen ideas about what I would like to change. For example, the benefits of upselling – of adding just 0.1 of an hour to an RO. It seems like a minor item but when you sit down and do the numbers, at the end of the year it is a lot of money!

And the course covered more than I expected – it’s one of the few courses I have done, and over the years I have done many, where I will go back through the workbook and keep going over it again and again – it’s really relevant.’

For Ray’s Service Manager colleague at Oldmac, Andrew Kempers, the course was just as positive.

38 | AUGUST 2015 | automotivedealer.com.au ‘Thecourse went really well,’ said Kim. ‘As a small group, it was a very conversational environment and from day one to day three something seemed to grab them - what we might call “light bulb” moments. For instance, we saw how small changes, as with adding to an RO, could make a big difference to the bottom line.

Most businesses do things very well, but the course allows them to focus and see things that can lift them up a notch – [it] shows how you can make incremental changes that can make a big difference to the business.’

TheService Department Operations Management course and the Sales Operation Management I and Sales Operation Management II courses are now available through the AADA.

Call 07 3237 8777, email courses@aada. asn.au or go to www.aada.asn.au for more information.

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automotivedealer.com.au | AUGUST 2015 | 39 MOTORSPORT Australian Automotive Dealer Association ON TRACK WITH CRENNO - MOTORSPORT MEMORABILIA

How many memorabilia collectors like Carrington Ashton are there? But make no mistake, one of the crucial features of a strong team brand in sport is the income that brand can generate from apparel, merchandise and licenced products.

There is not the slightest doubt that the enormous income HRT received from its merchandise sales between 1996 - 2002 stemming from the team’s key public personalities (Brock, Lowndes and Skaife) was the most compelling reason HRT had such a great budget to go racing.

Motorsport produces a significant number of John Crennan displays some of his motor racing memorabilia. enthusiast collectors, both in two wheel and four wheel varieties, from the collection of full In the AFL for example there are 18 teams cars and bikes, to accessory items like helmets John Crennan and we would not be too far off the mark in gloves and artworks. suggesting an average turnover of $5m in Motorsport Contributor For over 40 years I had accumulated a vast apparel or total market of around $100m. collection of GMH, Holden, HRT, HDT, In motorsport, with V8s and around 12 teams, Brock, HSV, HYL, SV Racing memorabilia one would estimate a $25m pa market for (close to 2000 items) which ultimately after apparel. finishing at HSV, I packaged into approx. 50 have often pondered what the overall annual categories such as hats, jackets, drivers suits, dollar value of the sports memorabilia In 2002, at the height of HRT track success, original paintings, model cars, milestone Iindustry would be in Australia. No matter the team generated over $12m in apparel books, watches and cuff links (to name just a what the sport; football, cricket, golf, tennis or and merchandise sales, plus an extraordinary few). motorsport – there are enthusiast collectors of level of income from licenced products. That all sizes who place great value on the treasures rate of dollar sales would have since dropped Like a lot of collectors who don’t have their they have acquired and whose collection dramatically, as every other team in the pit treasures on display in their garage or some represents a very important part of their lane started to emulate that business model. other form of ‘man cave’, after time you start to lifestyle. On top of that, in 2003 HRT lost its success tire of the collection and its upkeep and start momentum following the financial collapse of questioning the sense of keeping everything in On top of the keen collectors, it’s fair to say the Walkinshaw Group. storage. This was my situation 18 months ago that of all the blokes I know who have an when I decided to quit everything other than interest in sport, they seem to have at least one piece with a sentimental attachment, normally purchased at a charity auction.

Then there are traders of memorabilia; people buying and selling either as a full-time occupation or as casual top-up income. There’s also the really serious side of the industry, where at every major shopping centre there’s now a sports memorabilia store.

It’s difficult to make an estimate of the value of the sports memorabilia industry, but in mainstream, it’s not so difficult to get a handle on the ‘economy’ of the general apparel/ merchandise business. Construction begins on the “Man Palace” the pieces that had been personal gifts and signed by business colleagues and drivers.

I first offered my collection to HSV who, much to my surprise, did not show any interest. We then produced a catalogue to allow Dealers first pick prior to any public offering. Half a dozen Dealers took up about 15% of the offerings, so following that my son Jonathan, who was managing the project, started to dribble a few items out on EBay.

Enter Carrington Ashton.

Carrington Ashton (CA) is an alias for a Peter Brock’s HRT driving suit - Bathurst 1995 Tom Walkinshaw’s last driving suit from 1988 gentleman who resides on the outskirts of Sydney. CA is a very private person who conducts his own large and successful Part of the arrangement with CA is to also When the facility is completed at Christmas, business in the building and construction assign my business diaries and files and all there will be a John Crennan Holden, HSV, industry and has a great interest in the chapters of my book I never got around HRT, SV Racing, HYL wing with my entire motorsport memorabilia. to publish. These diaries represent some collection professionally displayed. It will be fascinating and not-before-told inside inscribed in chronological order and CA has On getting to know him over nearly six happenings surrounding events such as the promised to provide a set of keys to the facility months, I learned CA’s mantra: ‘some people day-to-day dramas leading to the ‘87 Holden/ for my family and friends to use should we create history others preserve history’ – and Brock split, the ‘94 Holden/HRT/ Brock re- ever wish to visit. If that’s not enough, two his enjoyment comes from the latter. marriage the HRT/Wayne Gardner events of months ago as CA was having every item ‘93, the HRT/Craig Lowndes finish in 2000, cleaned and laundered, CA invited me to CA contacted my son following some of our the TWR Collapse in ‘03 and the Skaife/ nominate as many items as I wished to have driver suit eBay listings. Long story short, Walkinshaw change of control in ‘07 to name passed onto my seven grandchildren when CA he drove to Melbourne where we spent a lot a few. of time together with CA ultimately driving passes on. away the proud owner of significant driving CA has commenced construction of his new suits from Peter Brock, Craig Lowndes, Tom motorsport ‘man palace’ (definitely not a He has already made these changes to his Walkinshaw and Jim Richards. cave) and earlier on shared with us his design Will and I am left with an experience which and construction plans for this $550k private is one of the most inspiring and good- After that, CA my son and I developed a facility (no entry to public) to showcase spirited gestures of my 50 plus years in this strong and extremely trusting association, all his growing collection. The facility will be fantastic industry. culminating in February this year with CA alongside his family residence. driving to Melbourne with a huge trailer and It’s hard to imagine how anyone could have the three of us spending a day and night going But it’s the next two elements of our mutual been so fortunate to come across Carrington through all the memorabilia and packaging arrangement that make this collector’s story so Ashton to provide such an extraordinary them for their superb new home in NSW. wonderful and very special to my family. solution for my large collection.

To take advantage of the opportunities and manage the challenges it’s critical to choose an adviser that understands your industry – both locally and globally. KPMG has been working with dealerships like yours for 100 years. We combine our extensive industry knowledge and insights gained to help our clients address their The automotive most pressing issues and achieve their goals. To understand more about how KPMG can assist your industry is dynamic dealership, contact Aaron Street, Sector Leader, Automotive and changing on 07 73233 3138 or [email protected]. kpmg.com.au

automotivedealer.com.au | AUGUST 2015 | 41 FEATURES Australian Automotive Dealer Association ACCESSING INTERNATIONAL AUTOMOTIVE WORKERS: LEVELLING THE PLAYING FIELD

any automotive dealerships make extensive use of international workers Mto address the long-term trade skill shortages in their service departments. Typically on ‘457 visas,’ these workers bring much needed skills in mechanical repair, auto- electrical work, body repair and painting. Auto Skills Australia’s labour force modelling of skills demand and supply, indicated a national shortage of over 16,000 skilled workers as at October 2014 with the demand across the service industry remaining a major long-term problem. contribution to an industry-wide approach to relocating workers and their families, ensuring It can be complex and time-consuming to this critical issue. (See contact details at end of candidates are not vulnerable to taking out deal with recruitment and the Department of article.) often-extortionate loans to fund relocation. Immigration and Border Protection to sponsor workers. Particularly for small dealerships, this With experience sourcing international 5. New Country Support Services can put international workers out of reach, candidates for clients in Australia and New simply due to the administrative burden and Zealand, McFadden highlights the five key A job is just one aspect of a person’s life, and cost. The Department directs businesses to issues for prospective employers to manage: people new to Australia may need assistance migration agencies for assistance, but often this with a variety of aspects of their new lives. In adds another layer of cost and administration 1. Transparency many cases, employers are not able – or it is to the process. not appropriate for them – to help with these Verify that candidates are not being charged requirements. It can also introduce ethical issues – while placement fees – either upfront or as a migration agencies in Australia must be percentage of future earnings. You might now be feeling more overwhelmed registered and are subject to oversight and than ever, but this is exactly the problem review by the Office of the Migration Agents 2. Skills Assessments McFadden is seeking to solve with One Registration Authority (MARA), once World Resourcing’s Ethical Resourcing the trail leads overseas there can be a lack How do you validate candidates’ qualifications Model®. It is a ‘pick-and-mix’ package of a of transparency. One World Resourcing and skills at a distance, and understand what full range of services, from skills analysis Director Liam McFadden said, ‘International additional training and accreditation they resourcing in Australia has been generating will need? For example construction industry and training, to finance packages through a media attention on rogue employment clients have to coordinate the worker obtaining major bank for relocation costs, and arranging intermediaries exploiting the vulnerabilities of their ‘white card’ or other required paperwork. accommodation and support services for international workers, which true or not can workers. The model is proven in NZ and is 3. Visas pose a significant reputation or brand risk to now being refined and enhanced to meet evolving needs of the auto servicing industry businesses’. Few, if any, small business owners have the in-depth understanding of immigration law here in Australia. McFadden is on a mission to extend ethical required to handle this aspect of international resourcing of skilled labour throughout To share your experiences or discuss recruitment. Both the hiring organisation and our industry, and to ‘level the playing field’ your critical recruitment issues, contact candidats need guidance. so that even smaller dealerships can better Director Liam McFadden (Liam@ access skilled international workers. He is 4. Relocation Finance oneworldresourcing.com). For more about currently inviting AADA members to share the Ethical Recruitment Model see both their experiences and current issues as a Ethical employers meet the upfront costs of www.oneworldresourcing.com.

42 | AUGUST 2015 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association LUXURY CAR TAX THRESHOLD UPDATE

The Australian Taxation Office (ATO) has recently released the latest threshold figures for the 2015-16 financial year; including the threshold for fuel-efficient vehicles.

In summary,

• The new LCT threshold for the 2015-16 financial year is $63,184 (a rise of $1300)

• The fuel-efficient car limit for the 2015- 16 financial is $75,375 (the same as last ealers who are impacted by the Luxury financial year) Car Tax (LCT) should be aware These limits apply to the financial year of the most recent changes to the D commencing 1 July 2015. Dealer software and thresholds. The LCT threshold is indexed spreadsheets used to calculate the LCT should annually according to a factor determined by be updated accordingly. Parliament or, in accordance with movements in the All Groups Consumer Price Index (All For more information head to the ATO website Groups CPI). or get in touch with your professional advisors.

SAFETY SELLS.

After walking your customers through the showroom, walk them through the updated ANCAP website.

The ANCAP website lists the safety ratings for more than one thousand different makes, models and variants with the ability to access crash test results, photos and videos all from the one screen.

So if you’re looking to secure that next sale by impressing your customer with safety information second to none, walk them through: ancap.com.au

automotivedealer.com.au | AUGUST 2015 | 43 FEATURES Australian Automotive Dealer Association HOW MANY IS TOO MANY?

With 123 car plants in China, overcapacity is only expected to get worse

The enthusiasm for building in China began in 2007-08 when European manufacturers such as VW and American automakers including Chrysler and General Motors sought refuge from the Global Financial Crisis by going into joint ventures with state-owned manufacturers to build cars in China.

GM has 22 factories on the mainland while Volkswagen has 28 and plans to open three more over the next few years. Renault, Hyundai and Fiat-Chrysler Automobile’s Jeep have already built or have plans to commence manufacturing there in the next few years.

Not only that, but as the world’s largest economy slows, so too do new car sales.

Many buyers in China are now opting for second hand cars for the first time ever, especially now that there is an abundant supply of used stock. (See page 26)

New car dealers are also doing it tough and feeling the impact of the downturn as well as the increased restrictions on new car ownership by city governments.

Dealers are calling for financial support and lower sales targets from OEMs. They also want manufacturers to pull-back on Dealer expansion and reductions in their sales targets. What’s the solution? n 2014 China produced 20.98 million One leading forecaster says that factories vehicles according to the Chinese across mainland China have the capacity to China’s policy makers say that the auto Association of Automotive Manufacturers, I build 10.8 million more vehicles than will be industry should focus on better inventory extending its lead as the world’s largest and sold in greater China. management, production optimisation and most profitable car market. Currently there creating economies of scale. Also, auto makers are 90 brands and 475 models available on the With so many car plants the problem of ‘waiting at the gate’ to enter the Chinese market. overcapacity will only get worse. market may find it harder to get into the market. Increasingly, domestic and foreign-based ‘A rough rule of thumb in car making is that car makers are putting their margins and assembly plants need to be working above Consolidation will also help streamline profitability at risk by building more factories about 75 per cent capacity, assuming two-eight the local manufacturers, placing them in in China than anywhere else in the world. hour shifts each normal working day, to be a better position to take on bigger foreign rivals. Finally, many commentators think profitable’, says The Economist, one of the By 2017 there will be 140 car plants in China, that structural change is long overdue in the world’s leading independent news magazines. the highest number of any auto producing Chinese auto industry. nation, with 11.4m vehicles worth of idle ‘In contrast the average for Chinese assembly capacity. plants has now slipped to below 70 per cent.’ Time will tell.

44 | AUGUST 2015 | automotivedealer.com.au WORKPLACE RELATIONS Australian Automotive Dealer Association EMPLOYING STAFF CASUALLY VS PART-TIME

Here are the basics you need to consider when deciding between casual or part-time staff

Ted Kowalski of the week is being worked and whether A part-time employee must have fixed hours the hours represent overtime. By definition, and days of employment which are set out Contributor a ‘casual’ is someone whose employment is in writing at time of engagement. Any hours uncertain and irregular. worked outside of the agreed days and times becomes overtime and must be paid for at Under the terms of the Vehicle Manufacturing overtime rates. Repair Services and Retail Award (aka hen you require an employee for less the Vehicle Award) a casual who has been A part-time employee is paid the same hourly than 38 hours per week, you have employed for six months must be advised that rate as a full-time permanent employee, but Wa choice as to how to employ them. he/she can apply to become a permanent part- only for the actual hours worked. They accrue Usually the first thing to consider is whether timer. You are not obliged to grant the request annual leave and sick leave in proportion to you need some flexibility in the team member’s if there are good reasons for maintaining the hours worked. Also, part-time employees hours. Do you only require the person to fill-in the casual contract. The most likely reason are paid for public holidays if a public holiday at your busiest times or will they be needed for refusing the request would be that the falls on one of the days they would normally consistently throughout the year? business requires the flexibility that a casual work. Annual leave accrues at the rate of one- engagement provides. The Clerks Private thirteenth of the ordinary hours worked per Casual Provisions Sector Award has no such obligation regarding week and sick leave accrues at the rate of one part-time conversion. Under the Vehicle twenty-sixth of the ordinary hours worked. If flexibility is the most important factor, you Award a casual can be employed for as little For more information seek guidance from should consider a casual engagement. A casual as an hour per engagement, while the Clerks your professional advisor or contact MTA employee is paid by the hour and receives a Private Sector Award provides for a minimum Global - email [email protected] to register 25% loading on their hourly rate because they of three hours per engagement. and access AADA Industrial Relations and do not accrue annual leave or sick leave and Workplace Health and Safety related services are not paid for public holidays – unless they Part-time Provisions at a special member rate. actually work on the day. Where you require an employee for regular, You should note that the standard casual fixed hours you should consider a permanent loading does vary depending on what day part-time engagement.

automotivedealer.com.au | AUGUST 2015 | 45 WORKPLACE RELATIONS Australian Automotive Dealer Association WHAT ARE THE RULES GOVERNING SICK LEAVE AND CARER’S LEAVE?

Ted Kowalski A household member is any person who lives Failure of an employee to produce the with the employee. necessary evidence could mean that they Contributor would not be entitled to pay for the absence. A An employer is entitled to ask for evidence statutory declaration (sworn statement) from if an employee accesses either personal leave the employee could be accepted as long as it or carer’s leave. The employee is obliged to states why the employee was unable to obtain contact the employer within a reasonable time a doctor’s certificate and swears to the fact that of normal commencement to advise of either either the employee or an immediate family their illness or that they are claiming carer’s member was sick. he National Employment Standards leave. (NES) contain provisions governing sick For more information seek guidance from Tleave (now called personal leave) and Each company can formulate its own policy your professional advisor or contact MTA carer’s leave. regarding when a doctor’s certificate, or some Global - email [email protected] to register other form of evidence, will be required. That and access AADA Industrial Relations and All permanent employees, including part- policy should be advised to all staff and applied Workplace Health and Safety related services timers, but excluding casuals, accrue personal consistently. at a special member rate. leave at the rate of 1/26th of the ordinary hours worked each week.

For a 38 hour week, that equates to 1.461 hours per week – a total of 10 days per year.

Personal leave is cumulative, meaning that any accrual not accessed in a particular year carries over into the next year for the full period of employment. There is, however, no obligation to pay-out accrued personal leave on termination.

The NES allows an employee to access their personal leave accrual if a member of the employee’s immediate family or household is sick or injured or requires help during a family emergency. In such circumstances the leave is described as carer’s leave. An immediate family member is defined as a;- • Spouse • De-facto partner • Child • Parent • Grandparent • Grandchild • Sibling, or • Child, parent, grandparent, grandchild or sibling of the employee’s spouse or de facto partner.

46 | AUGUST 2015 | automotivedealer.com.au WORKPLACE RELATIONS Australian Automotive Dealer Association ‘DAD AND PARTNER PAY’ - WHAT IS IT AND HOW DOES IT WORK?

Ted Kowalski time Paid Parental Leave is received by the your Dad and Partner Pay period starts mother. Contributor 2. At least 330 hours in that 10 month period To be eligible a dad or partner must: – which is just over a day a week, with no contiguous gap of longer than 8 weeks • Be caring for a child born or adopted from between 2 working days, and 1st January 2013 3. Be on unpaid leave or not working during ad and Partner Pay is a Federal • Be able to meet residence requirements the Dad and Partner Pay period. Government funded program which is Dan extension to the Paid Parental Leave • Have an individual adjusted taxable income Theclaim can be started 3 months before the scheme. It became available to eligible working of $150,000 or less in the financial year expected birth date or adoption date of the dads or partners (including adopting parents (either before the date of the claim or the child and must be done through Centrelink. and same-sex partners) who care for a child date the Dad and Partner Pay period starts) - born or adopted from 1st January 2013. whichever is earlier For more information seek guidance from your professional advisor or contact MTA It provides for up to two weeks of government- • Meet the work test, which requires you to Global - email [email protected] to register funded pay at the rate of the National have worked for: and access AADA Industrial Relations and Minimum Wage – currently $656.90/week. Workplace Health and Safety related services Dad and Partner Pay can be taken at the same 1. At least 10 of the 13 months before the date at a special member rate.

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t’s almost impossible to imagine any business results or ‘slow burn’ branding opportunities And it’s not all about increasing Likes to your without some kind of digital advertising that take months to develop? Once you page. Iaspect integrated into their marketing understand this you’ll have a better idea of strategy. In our technology and convenience- which platforms to choose. For example, In fact, Facebook ads can bypass your driven world, even the most traditional types search advertising platforms, like Google ‘Facebook page’ altogether, instead directing of businesses and services are turning their AdWords work best when there is a clear traffic specifically to your website or unique gaze to the digital world. demand for your product and you’re keen URL. You can even measure how many direct to target and convert people immediately. actions were made on your landing page Here are seven ways to capture the attention of Meanwhile, social media may not harness (email enquiries, link clicks etc.) It’s a powerful the online crowd. results straight away, but over time can help tool with a lot of potential, if you use it right. you build a strong community of fans that may 1. Be Clever, Be Fresh one day become leads. 6. Integrate Your Marketing Imagine a row of shops on a street all selling 4. Get Savvy With ‘The Funnel’ A consistent marketing message is crucial to the same stuff. What’s going to make you not only reaching audiences, but ensuring that choose one business over the over? Chances The ‘buyer’s journey’, ‘sales funnel’ or whatever they understand what you want them to know. are you’ll walk into the store that looks the terminology you use to describe the process This means making sure that your ads are most professional, creative and relatable – your shoppers go through before signing the dotted integrated across all platforms. Adam O’Leary, digital presence should incorporate these line is key to achieving solid digital advertising President of Encite Marketing sums it up well: same ideas. Stand out from the crowd, and if results. Understanding how the buyer goes you create a great concept you better come up from awareness about a car, to research and ‘An integrated marketing campaign will garner with five more, because constant change and then selecting a dealership will help you form much better results than any single initiative. activity is the name of the game when it comes an advertising plan to effectively reach users at For example, Facebook Ads work really to online. every stage. well on their own when promoting a sale or publicising a new product, but it works much 2. Do Your Homework Quick results can be gained by targeting better when supporting another marketing internet browsers who are close to purchase. channel such as email.’ Don’t assume what your customers want or Google products can help you find these need – find out for certain. The best place users (based on browsing history) allowing 7. Seek A Specialist to start is usually at the source, that is, your you to craft messages that are relevant to this existing customers. Incentivise feedback by particular group. Most digital advertising platforms are offering a prize for people who provide their accessible to business owners, meaning they thoughts and ideas. Gathering this sort of data 5. Take Advantage Of Facebook can directly create ads and market to a wide and then using it before starting your online Advertising range of audiences themselves. This presents advertising will help you spend your budget great potential, but also pitfalls. Using digital more efficiently. Setting up a brand page on Facebook is just marketing incorrectly can be damaging to the tip of the iceberg when it comes to using your brand. If you’re not an expert, it’s a good 3. You Don’t Have To Be this platform to promote your business. Yet, idea to employ somebody who is. But does Everywhere according to a study from eMarkter, 80% of that mean you bury your head in the sand? No small and medium-sized businesses haven’t way – the more you understand about digital Every online platform offers different value used ads for Facebook. Relatively inexpensive, advertising the more you can assess the results and advantages. The key is to first determine flexible and impressively targeted, there are being provided to you and ensure your return your goals. Are you after quick, short-term more Facebook advertising options than ever. on investment is clear.

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THE 10-MINUTE INVISIBLE SERVICE MANAGER

Are your advisors clean and crisp? Is your People hate standing in line for anything, Randy Johnson phone ringing too many times without getting especially to pay a bill at a dealership. So if you answered? Is it not ringing enough? Are there saw this and if you recognised it as a problem, Founder and customers standing beside their car waiting which I know you did - you know instinctively President, Car to be greeted - and do they look happy or you need to either jump in and help your People Marketing, aggravated? Are there customers standing in receptionists, pull someone else in to help or Inc. line at your service reception? What else do put in a process that is better (my favorite)– you see? like having your service advisors do the invoicing instead of having a separate cashier. Well, if you really did this and if you answered those questions honestly, you In other words, you would use common sense K, no matter what you are doing, I dare probably have a good idea of what to do next. corrective actions that you already know to you to stop right now for 10 minutes. Remember this, you were most likely hired solve the problem, right? So the real problem OSeriously, take 10 minutes; walk out to as the manager because someone believed in here isn’t that you don’t know how to fix the your service department and just look at what you- they figured you had what it takes and problem, the problem is you may not know is going on. Just watch and observe. Don’t talk they felt comfortable with you running that you have a problem – and that is the problem! to anyone – just pretend you are invisible. I department for them, but sometimes service promise you this 10-minute exercise will be managers get so busy being busy that they You have to spend more time in your service worth it if you force yourself to do it. lose touch with what’s really going on in their department and less time in your office if you dealership! ever expect to grow your business. The service And don’t just look, really take note and do a department is where all the money is, where all little self-analysis about what’s going on in your Let me explain further. If during your little of the opportunities are and where long-term service department. Does it seem organised or observation, you noticed a lot of people customer retention can be won or lost. chaotic? Is it clean and flowing and does it look standing in line at the service reception, you professional? know you have a problem.

50 | AUGUST 2015 | automotivedealer.com.au If you fix the ‘status call’ problem, and the phone is still ringing too much, you can quickly see that your advertising is working – but maybe you are not staffed properly to handle the opportunities or it could be that you have a poor process in place to help your people maximise those opportunities. And if the phone isn’t ringing, you need to advertise more to create more opportunities. But you will know you have a problem and you will fix it, but, you can’t fix it if you don’t know you have one. You have to be out there!

I think all of us service managers have a little bit of technician in us – we like to fix things that are broken. Take that inherent common Here’s another example. If your phone is sense knowledge on fixing things, along with constantly ringing that can be good and bad. the confidence that someone believed in you It could mean people are trying to do business enough to hire you for the manager’s job - and with you – and that obviously appears to be get to work. Do the 10-minute thing. Watch good. But it could also be that your advisors and listen. Ask yourself how you would feel if aren’t calling customers back to update them you were a customer calling your dealership. on the status of their vehicle – so they end up Ask yourself if you would do business with you feeling ignored and eventually they call your and if you answered no or probably not – then dealership to check to see if their car is ready do what you do best – fix it! – and that is not good. Question is – do you know what types of calls you are getting? http://www.carpeoplemarketing.com/

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he cold months aren’t raining on the the sculpted, fluid lines you’re used to on other Prado and Mitsubishi Challenger. The Everest parade of Australia’s new car scene, with ‘Mercs’, but inside it’s business as usual with will initially offer two TDCi turbo-diesel Ta number of exciting models expected luxury appointments and sophisticated tech. engines both related to the updated Ranger. to hit our showrooms soon. Year-to-date sales Meanwhile, speed enthusiasts will relish the Mercedes-Benz will release its large GLE of new cars in Australia are on the incline and launch of the new C63 AMG and AMG GT – (replacing the ML-Class). Then there’s the it’s expected that the wave of fresh models over the latter of which offers supercar strength to quiet contender Ssangyong, which will attempt the next few months will help continue the rival Porsche’s iconic 911 GTS. to grow market share in Oz with the uniquely upward trend. styled Tivoli small SUV. The company’s first Also in July, we’ll likely see the release of the all-new car in four years, its distinct looks and July revised Mini Cooper as well as Skoda’s small long list of standard equipment may very well car Fabia. help it succeed. Mercedes-Benz Australia has a particularly busy July with the launch of three exciting August Mazda will also be busy in August with the models expected – the V-Class, C63 AMG and release of two new models – including the AMG GT. The first mentioned is a boxy people In August we’ll welcome a number of SUVs hotly anticipated MX-5, continuing a long mover that’s been on sale for two months (with to Australia’s already packed SUV market. legacy of small convertible sports prowess. The first deliveries expected in July). With room for Significantly, Ford will release the Everest – a other is the Mazda 2 sedan which will sport up to eight people, the V-Class may not feature heavy duty 4X4 aimed at the likes of Toyota sharp looks and equipment grades missing in its predecessor.

52 | AUGUST 2015 | automotivedealer.com.au SALES & MARKETING Australian Automotive Dealer Association A STRONG JUNE HELPS PUSH AUSTRALIA’S TOTAL NEW CAR SALES VOLUME OVER HALF A MILLION

ales in June 2015 totaled 125,850. was small passenger and light commercial vehicles that dominated the top five list. The Top Ten Brands in June 2015 Thisrepresents a whopping 6.4 per cent Hyundai i30 was the top selling car in June S Toyota 21,501 increase on June 2014; and has helped with 5,521 sales, followed by the Toyota Hilux year-to-date sales increase by 3.3 per cent on (4,281), Toyota Corolla (4,152), Mazda3 Holden 11,928 the same time last year. (4,127) and Mitsubishi Triton (3,526). Mazda 11,526 Hyundai 11,007 According to FCAI Chief Executive Tony Business sales have been particularly strong, Mitsubishi 9,011 Weber the current affordability of new cars according to Mr Weber: in Australia has certainly helped the upward Ford 7,251 trend. ‘In June 2015, we have seen new car sales to Volkswagen 7,103 business increase 10.5 per cent. Specifically, Nissan 6,636 ‘According to CommSec, car affordability in business buyers purchased 20.8 per cent more Honda 5,311 Australia is the best it has ever been. Coupled SUVs, 9.1 per cent more passenger cars and Subaru 4,502 with offers such as capped price servicing and 3.4 per cent more light commercial vehicles. low interest rate finance, now is a great time for Australians to buy a new car.’ Mr Weber ‘Sales to private buyers rose 3.7 per cent and said. sales to government buyers rose 3.5 per cent.’ Top Ten Models in June 2015 Hyundai i30 5,521 As part of the ongoing trend, SUVs continue Geographically, sales rose in all states and Toyota HiLux 4,281 to show the highest growth, with 42,256 SUV territories except in the Northern Territory, sales representing a massive 14.7 per cent South Australia and Western Australia. Toyota Corolla 4,152 increase on June 2014. Comparatively, the Mazda 3 4,127 passenger car segment rose 4.7 per cent, whilst As is expected these days, Toyota continued its Mitsubishi Triton 3,526 (surprisingly) the light commercial vehicle reign at the top of the food chain, with a 17.1 Ford Ranger 3,372 per cent slice of the new car market. Holden segment fell 3.1 per cent. Holden Commodore 2,772 (9.5%), Mazda (9.2%), Hyundai (8.7%), and Despite strong SUV market performance, it Mitsubishi (7.2%) followed accordingly. Volkswagen Golf 2,682 Toyota Camry 2,602 Mazda CX-5 2,512 VEHICLE SALES FOR JUNE 2015

MONTH YTD VARIANCE +/- VOL. & % TOTAL MARKET 2015 2014 2015 2014 MTH YTD MTH YTD ACT 1,893 1,792 8,981 8,736 101 245 5.60% 2.80% NSW 42,105 37,574 188,902 178,285 4,531 10,617 12.10% 6.00% NT 1,189 1,258 5,884 5,808 -69 76 -5.50% 1.30% QLD 27,270 24,643 121,198 115,036 2,627 6,162 10.70% 5.40% SA 7,286 7,531 34,685 35,048 -245 -363 -3.30% -1.00% TAS 1,989 1,743 9,042 8,334 246 708 14.10% 8.50% VIC 32,615 31,327 155,495 149,488 1,288 6,007 4.10% 4.00% WA 11,503 12,440 54,240 59,215 -937 -4,975 -7.50% -8.40% TOTAL 125,850 118,308 578,427 559,950 7,542 18,477 6.40% 3.30% 2015 AADA NATIONAL DEALER CONVENTION Australian Automotive Dealer Association AUSTRALIA’S DEALERS GATHER FOR 2015 AADA NATIONAL DEALER CONVENTION he AADA Convention is the premier annual gathering The theme of the convention is ‘Stronger Together’, with sessions of Australia’s retail automotive dealers, and convention designed to address how the industry can grow together through Tnumbers are approaching record levels. strengthening the relationship between OEMs and dealers. The keynote speaker is Peter Welch, president of National Highlights include a panel session on ‘The Future of the Auto Automobile Dealers Association, AADA’s American equivalent. Industry’, moderated by convention host, Walkley Award-winning Other high profile speakers include Robert H. Kurnick Jr, the head journalist Ian Leslie. of the world’s second-largest dealer group. A host of celebrities will be on hand to entertain, with National Dealer Councils and franchises will hold meetings and inspirational talks from Walter Mikac, who lost his entire family the AADA will reveal the results of the groundbreaking National in the Port Arthur massacre, and hero pilot Captain Richard De Dealer Attitude Survey. Crespigny.

We look forward to seeing you there!

MONDAY 10 AUGUST 2015 A SONG OF SALES AND SERVICE 7PM – 10PM

George Retail Retention Martin

If you want to earn that coffee, George Dans is As President and co-founder of training and your man. The World’s Greatest Closer is not consulting firm, Mar-Kee Group – David a nickname you get by accident. According to brings over 38 years of automotive sales, George, the secret is not to work harder, but training and management experience. smarter. Communication is the key. Rest-assured, when you attend one of David’s ‘Sales are missed because the salesperson does training workshops you leave with added not have the right words to close the sale,’ he skills and power to improve business. In three says. “I have heard salespeople say, ‘I wish dynamic hours, Convention delegates will selling was easy’, instead of, ‘I wish I was better be inspired and educated by an authority on at selling’. The best way to build a sale is to dealership fixed operations. build the value and then ask for the order.” There’sa goldmine waiting to be uncovered George is one of the most in-demand in every service department and it all starts at motivational speakers in the sales industry, the counter, according to David. Amongst a and after attending this event you will know raft of clever new techniques and tips, David why. Bring your sales staff and have them will share real-life examples and case studies ready to jump out of their skins for the rest of that demonstrate how your service counter is he 2015 AADA National Dealer the convention. a gold mine – you’ve just got to know how to Convention Pre-Day events come to a open it. Tclimax with a special event featuring ‘The If George is the World’s Greatest Closer, David World’s Greatest Closer’, George Dans, and Martin is the Master of Service. The five-time Thissession featuring two legends of the game David Martin, the man who has been voted AADA Best Speaker winner has also presented is the ideal way to get your staff motivated and Best Speaker at five of the six AADA National at nine NADA Conventions and is so popular into ‘Convention Mode’. Don’t miss out! Dealer Conventions he has attended. because he is so good. George Dans, The World’s Greatest Closer, “Coffee’sfor closers.” So said chief motivator Over nearly four decades he has built a Plenary 3 Theatre, 7:00pm, August 10, and salesman extraordinaire Blake in the comprehensive knowledge of every facet of 2015. David Martin, 12 Foolproof Ways classic play/movie ‘Glengarry Glen Ross’. running a car dealership. David knows that to Increase Service Sales and Customer “A-B-C. A-Always, B-Be, C-Closing. Always be margins are tight and that the edge can be Retention, Meeting Rooms 210+211, closing. ALWAYS BE CLOSING.” found at the service counter. 7:00pm, August 10, 2015

54 | AUGUST 2015 | automotivedealer.com.au EXCLUSIVE DEALER-ONLY SYMPOSIUM TO KICK OFF CONVENTION

Make sure you don’t miss out on this brilliant and informative session, the essential beginning to your 2015 AADA National Dealer Convention

n exclusive, private symposium BDO partners Mark Ward and Randall Bryson Industry Address: Doug featuring one of the biggest names in will use their extensive automotive industry Aworld automotive retailing is the feature experience to explain the survey results and Dickson of the opening morning of the 2015 AADA interpret the implications for dealership National Dealer Convention. operations. Mark and Randall have a thorough Doug is the Independent Chairman of the understanding of compliance services, Australian Motor Dealer Council (AMDC). Keynote Speaker dealership operations and taxation matters, Working with the AADA, the AMDC will including income tax, FBT and GST. significantly alter advocacy for Australian Robert H. Kurnick Jr., president of the world’s motor dealers, developing constructive second-largest automotive group, Penske TheAustralian retail industry has never before policy and consolidating a strong working Automotive Group, will deliver the keynote undertaken such a broad survey of Dealers all relationship with the Federal Chamber of speech of the AADA Dealer Symposium, an across Australia. You would not want to miss Automotive Industries. exclusive event for Australia’s retail automotive the results and implications for the future. Thisis an alliance that will bear great fruit over dealers. Benchmarking for Dealer Ops time. Doug will outline its aims and purposes and reveal the board’s vision for policy Mr Kurnick will share his thoughts on the and Critical Indicators current state of the automotive landscape development within the existing National Dealer Council structure. internationally, elaborate on DJR Team Penske Deloitte Motor Industry Services partner Dale – a powerful new alliance in V8 Supercars – McCauley will share his nearly two decades TheAADA Dealer Symposium is sure to and answer audience questions in a Q & A experience in helping dealers maximise provide great insight into the future of our session at the end of his keynote address. profits and sell more cars through data-driven industry. With an address from a world insights and operational excellence. National Dealer Attitude Survey leader, an unprecedented insight into the collective mindset of the business, ideas for Results Hugely in-demand for his knowledge and future policy direction, and strategies for experience across all aspects of dealer maximising sales and profitability, you can’t TheSymposium will also feature the release operations, Dale will address critical indicators afford to miss it. of results of the first-ever National Dealer through 2017 to help you prepare for the next Attitude Survey, a detailed examination of the 2+ years. 9:00am – 11:45am, Tuesday 11 August 2015. current mood of our industry, compiled from Plenary 3 Theatre. the thoughts and feelings of those on the front line – the Dealers themselves.

automotivedealer.com.au | AUGUST 2015 | 55 2015 AADA NATIONAL DEALER CONVENTION Australian Automotive Dealer Association THE PENSKE FILE

The 2015 Convention kicks off with a keynote address by one of the biggest names in the world automotive industry, in a must-attend session exclusive to Dealers

President of Penske since 2008, Mr Kurnick Mr Kurnick will give an expert’s opinion on has spent two decades in the industry. As issues such as the changing manufacturing the head of a company that employs more landscape and the ramifications for Dealers, than 22,000 people worldwide, he is uniquely employing Generations Y and Z, business placed to provide a leader’s perspective on the strategies and more. current state of the international automotive industry. In a treat for V8 Supercar fans, Mr Kurnick will also talk about DJR Team Penske, the A Fortune 500 and Russell 2000 company, powerful new alliance in the sport. A force Penske Automotive Group operates 326 retail in US racing, Penske has merged with Dick franchises representing more than 40 brands Johnson Racing and is represented in the across the USA, the UK and Western Europe. 2015 season by two-time champion Marcus ver the years the AADA National Dealer The company reported $US4.5 billion in Ambrose, himself returning from nine years Convention has brought out to Australia revenue in the April quarter, up 11.4%. It has racing in the US. Osome of the world’s biggest automotive a market cap of $US4.72 billion on the New dealership names, and there is none bigger York Stock Exchange, and is valued at $US8.79 At the end of his keynote address, delegates than Robert H. Kurnick Jr., head of the billion. are invited to engage Mr Kurnick in a Q & second-largest dealer group in the world. A, so make sure you don’t miss the chance to Mr Kurnick has been with the company for 20 probe one of the great business minds in our President of the Penske Automotive Group, years, serving in various positions as well as industry. Mr Kurnick headlines Day 1 of the 2015 sitting on the board of directors for the Penske Convention, delivering the keynote address at Corporation and the Penske Automotive AADA Dealer Symposium, 9:00am – the exclusive Dealer Symposium. Beginning Group. He is also part of the executive 11:45am, Tuesday 11 August 2015, at 9am, the symposium is a Dealer-only event committee for each of those boards. He has Plenary 3 Theatre. designed to set the tone for the convention, a wealth of knowledge on the challenges and and focus delegates’ attention on the major opportunities facing the automotive industry Keynote Address: Robert H Kurnick Jr., issues facing our industry. today and into the future. Penske Automotive Group President.

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56 | AUGUST 2015 | automotivedealer.com.au ANOTHER REASON TO ATTEND THIS CONVENTION

BDO partners to reveal results of the National Dealer Attitude Survey

he AADA National Dealer Convention It was based on similar surveys conducted in ‘By participating in the survey, Dealers will has always been the driving force in the United States by NADA and in the UK have the opportunity to give their opinion Thighlighting key issues affecting Dealers by NFDA and addressed four major areas of on an extensive range of topics including and their businesses. concern: Franchises, Financial, Facilities and profitability, value, investment, consolidation The Future. and the challenges they would like the AADA At this year’s Convention the AADA will once again be on the front foot, divulging the to address,’ says the AADA’s Michael Deed. Theresults will be revealed at the Dealer results of the highly anticipated 2015 AADA Symposium on the first morning of the ‘It will also identify opportunities to improve Dealer Attitude Survey prepared by BDO – a Convention by BDOs National Leader relationships between the Dealer network and recognised leader in providing high-quality advice, consulting and training services to the Automotive, Mark Ward, and Brisbane the manufacturers and importers.’ automotive industry. Partner, Randall Bryson. Thissession, together with the other 28 high- Thesurvey was designed to capture Dealer’s Theywill interpret the findings and their impact business sessions, is just one more opinions on key industry issues affecting their implications from a Dealer operations reason why you can’t afford to miss this year’s relationships with manufacturers. standpoint. AADA National Dealer Convention.

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As the lead partner of Deloitte’s ‘Profit Focus’ • Corporate structures division, Dale specialises in benchmarking, • Buy / Sell negotiations consulting, training and advice. He believes data-driven insights and operational excellence • Changeover procedures are the drivers of success and profit. Qualifications and professional He has more than 17 years’ experience in helping Dealers and manufacturers maximise memberships their profits, using his expertise in accounting, • Bachelor of Commerce (Accounting) financial management, benchmarking, business consulting and profit improvement • Member of Chartered Accountants processes for retail motor dealers, in Australia very Dealer wants to sell more cars and manufacturers, financiers and legal advisors • Certificate of Public Practice make more money. But how? within the motor industry. E • Company Director Data. Knowledge is power. Information Dale is also actively involved in providing is King. dealerships sales and acquisition advice and Brands and Major Clients handles most of the major transactions for As part of the exclusive, Dealer-only the motor industry. He is a regular speaker include Symposium on the opening morning of at AADA, industry seminars and is a key • Automotive Holdings Group the AADA National Dealer Convention, presenter of Dealer Groups and Training Deloitte Motor Industry Services partner Dale Programs. • Volvo Cars Australia McCauley takes a global look at dealership operations across Australia, addressing Dale is the Partner in charge of the Training, • Chrysler Australia national benchmarks and critical indicators Consulting, Dealer Groups and the People and • AP Eagers Ltd through 2017. Performance part of Deloitte Motor Industry Services. His major achievements are the • Audi Australia development of Profit Focus benchmarks and • Volkswagen Australia the first motor industry CRM benchmarks. • Hyundai Motor Corporation Dale specialises in the • Sime Darby Motor Group following areas: • Mitsubishi Motors Australia • Retail Motor Industry • Renault Australia • Dealership Profit Enhancement • Altomonte Holdings Pty Ltd • Operating systems • Subaru (Aust) Pty Ltd • Benchmarking • Nissan Motors Australia • Dealership Management • Mercedes-Benz Australia • Training and Executive Coaching • Honda Cars Australia • Customer Retention Management Don’t miss this important session: National • Asset protection Benchmarks for Dealer Operations and Critical Indicators Through 2017. Part of the • Succession planning AADA Dealer Symposium, 9:00 – 11:45am, • Family counselling Tuesday 11 August. Plenary 3 Theatre.

58 | AUGUST 2015 | automotivedealer.com.au AN EXPO OF INNOVATION AND ENTERTAINMENT

Celebrities and sporting stars will hobnob with delegates at the most entertaining, innovative, fun and inclusive Trade Expo Village ever seen at the Convention

he Trade Expo Village has always been the environment. You won’t lose information And of course, the Trade Expo Village will a popular destination for delegates on a new product or a business card as it will excel in its primary function of showcasing Tbetween sessions, but this year that will all be stored electronically. new products and services designed to go to a whole new level. The traditional hub of improve your bottom line. Whether it be innovative new products and services will be ThePentana Solutions Trade Village Luncheon after-market, insurance, finance, marketing, augmented by the addition of a variety of high- on Tuesday will feature a diverse range of software, customer retention or any other quality entertainers, attractions, the chance of menu options, making it ideal for catching up aspect of dealership operations, you can bet bumping into a high-profile Australian and with colleagues and counterparts from all over there will be something for you. an all-new layout designed to increase the the country. community feel. Trade Expo Village, Thenthere is the perennial favourite, Happy 12pm - 6pm Tuesday 11 August New digital technology at exhibitor booths Hour, between 5-6pm every day. It’s the perfect 8am - 6pm Wednesday 12 August. will allow exhibitors and delegates to exchange way to catch your breath at the end of a day’s information via a digital scanning system – sessions and conduct a spot of networking meaning less paperwork, waste and harm to before the evening’s event.

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2015 AADA NATIONAL DEALER CONVENTION Australian Automotive Dealer Association THE FUTURE OF THE AUTO INDUSTRY

In what is sure to be one of the highlights of the 2015 AADA National Dealer Convention, host Ian Leslie moderates a panel of esteemed industry leaders in a discussion about the future of the Australian automotive industry in a post-manufacturing world

onvention keynote speaker, Robert H. For the past 10 years he has been with large Peter Welch has spent 25 years as an advocate Kurnick Jr., the president and CEO of automotive retailer AP Eagers, the past nine as for the automotive industry. Formerly a CPenske Automotive, will join Ian, along CEO and director. partner in a Los Angeles law firm, he joined with AP Eagers CEO Martin Ward, AHG CEO the California New Car Dealers Association - Bronte Howson, Nissan CEO Richard Emery, Bronte Howson’s career in the automotive the USA’s largest state association of franchised and NADA USA president Peter Welch. industry dates back more than 30 years. He new car dealers – in 1990. Initially Director began with his own successful automotive of Government and Legal Affairs, Peter These giants of our industry will discuss how parts business that was acquired by AHG in graduated to president and CEO in 2003 – the next five years will shape the automotive 1988. He joined the company and was made positions he held for 10 years before becoming landscape following the cessation of CEO in 2000, a position he still holds. He president of the NADA in 2013. automotive manufacturing in Australia. was also made managing director in 2007, overseeing a period of strong growth. He led With over a century of retail automotive It is a time of immense challenge for the experience between them, these five gentlemen AHG from a private group operating mainly Australian industry, one that our American are sure to have plenty of wise words to say in Western Australia, into Australia’s leading cousins have also faced in recent years. The about the direction our industry is likely to listed automotive and logistics group. American automotive industry has recovered take, and some of the choices dealers will face, from crisis, and there are many parallels here. in the coming years. Ian will probe these leading minds for the Richard Emery has enjoyed a long and lessons we can apply to help our industry best successful career in the Australian auto It will be entertaining. It will be insightful. It is cope with the changing times ahead. industry. He has held senior positions with a session you cannot afford to miss. Land Rover, Audi, Mitsubishi, and spent five Martin Ward has been in the industry for 20 years as general manager of sales (Australia & TheFuture of the Auto Industry. Panel years, including four years as CEO of Ford NZ) for Mercedes-Benz, before taking up his discussion hosted by Ian Leslie. 2:15pm, Motor Company’s Sydney Retail Joint Venture, current role with Nissan 18 months ago. August 11 2015, Plenary 3 Theatre. from 2001 to 2005.

60 | AUGUST 2015 | automotivedealer.com.au CHANGING TIMES, CHANGING TRENDS

Demographer Mark McCrindle’s Convention Closing Keynote may inspire you to reshape your business

id you know that only 1 in 10 In addition, Mark is an in-demand social Australians use public transport to get to commentator across all media channels, not Dwork and more people walk than catch only because of his unique understanding a bus?! of key social trends and influences, but also because of his dynamic and engaging What’s more, the average Australian car communication style. drives 14,000 kilometres every year, meaning Australians, with more that 13 million vehicles Wendy Foster, President of the Society combined, drive 182 billion kilometres of Association Executives commentated annually – that’s to Pluto and back 20 times after seeing Mark on stage recently: ‘Mark’s per year! presentation was dynamic, professional and expertly tailored to the precise needs of our And more than half of households (54 percent) members. have at least two cars. In fact, there are almost as many passenger vehicles as there are adults Mark is an impressive and knowledgeable in Australia. speaker on the subject of Generation X.’

Thetimes are changing faster than ever – Some of his most requested topics include technologically, demographically, socially ‘Snapshots of Modern Consumers’, ‘The and economically. In the ongoing quest for Emerging Issues That Will Shape our Future’ relevance it is crucial that businesses and and ‘How Coaching and Mentoring has leaders observe the changes, understand the Replaced Commanding and Controlling’. shifts and respond to trends. Masters degree (MA) in sociology, and is A spokesperson for ANZ Banking said: ‘His an accredited QPMR (Qualified Practising Dealing with change and its implications is one presentation was fresh, engaging, interactive Market Researcher). of the most important and demanding parts of and responsive. He connected well with the any business, according to Mark McCrindle. audience and created natural breaks for input Mark’s enlightening keynote at this year’s and discussion.’ AADA National Dealer Convention will Mr McCrindle is an award-winning social empower your team to utilise the social and researcher, demographer, best-selling author Mark’s highly valued research and reports, and founder of McCrindle Research. presented through infographics, data demographic trends needed to thrive in the visualisations and videos have established him age of continuous change. His clients include some of Asia-Pacific’s as an expert demographer, futurist and social Don’t miss ‘Changing Times, Changing largest multinationals, many of the world’s best commentator. brands, numerous government organisations Trends’, Dealer Operations Day, 2.00pm and some of the country’s most recognised Academically, he is a graduate of the - 5.00pm, Wednesday 12 August, 2015, not-for-profits. University of NSW with a BSc (Psychology), Plenary 3 Theatre.

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G.C.G TURBOCHARGERS AUSTRALIA PTY LTD ABN 28 001 825 609 WWW.GCG.COM.AU EMAIL: SALESGCG.COM.AU EDITORIAL Australian Automotive Dealer Association 3 REASONS WHY YOUR DEALERSHIP NEEDS TO BE MOBILE

Today’s consumers are always on the go and constantly connected with their digital devices

Zach Klempf Tailor Your Website For Mobile friendliness’ ranking on Google. See how your dealership website rates today by test-driving Contributor Users Google’s Mobile-Friendly tool (google.com/ webmasters/tools/mobile-friendly/). On April 21, 2015 Google rolled out an update to its search ranking algorithm that But remember, just because your dealership dramatically lowers rankings for any website website passes the Google Mobile Friendly that isn’t found to be ‘mobile friendly.’ test that doesn’t mean it screams on the small-screen and provides the look, feel, and recent Forbes article predicts that by the Dubbed ‘Mobilegeddon’, websites that are not customer experience you want your brand to end of 2015, almost half of all Google optimised for viewing on a smartphone now deliver. Asearches will come from mobile form rank lower than websites that are tailored for factors (Olson, 2015). mobile engagement. With the NCM Institute Have several digital-savvy team members at reporting that 40% of Dealer websites receive your dealership test your website on their own As Millennial and Gen Y consumers traffic on mobile and Forbes stating that smartphones in the same way a consumer predominantly search online, the smartphone Google handles more than 88% of all global would search for vehicles and deals. Tweak has become an indispensable tool integrated searches – your dealership is toast without the pages they find that aren’t responsive and into all aspects of their daily lives and a smartphone-optimised landing site. With focus redesign efforts on improving mobile interactions. If your dealership is not already Mobilegeddon now in the rear view mirror, showroom shopping. Consider developing a thinking mobile-firstthen you are missing out do you know where your dealership website dealership branded mobile app or investing big time on this mobile revolution. ranks? Compare your website traffic before in a separate mobile site altogether to make Free your dealership and join the mobile April 21st to the most recent time period to sure your smartphone mobile user experience masses by embracing these three key understand what impact it has already had. clicks with your customers and tops the local components of a compelling mobile strategy: search rankings. Responsive mobile design is nothing new. It has been a hot topic for more than two Creating a business page on Google will also years, but there are still digital marketing allow mobile users to see your dealership’s vendors in the automotive space that do not phone number and location on Google deliver mobile-optimised, responsive design Maps when they search for you. Smartphone websites. Subtle differences in text size, link prospects can then easily add your dealership spacing, and fast loading media content can address to their GPS or call you with the click go a long way in improving your ‘mobile of a button.

62 | AUGUST 2015 | automotivedealer.com.au Invest In Mobile Advertising Try leveraging mobile-only coupons and target license and VIN scanning. If these features smartphone customers for time based deals on are not part of your current dealership CRM Most dealerships have some portion of services such as oil changes, tyre rotations, and system, explore your options to unleash your their advertising budget allocated for digital tune-ups when harsh weather approaches. salespeople back onto the car lot. marketing, and in one way or another are already involved with CPC (cost-per-click) Freedom From The Showroom Key Takeaways campaigns to bring traffic to their store. Floor General Managers need to adopt a mobile-first Beware of being lazy and using the same CPC strategy. If you’re not leveraging mobile in approach for a smartphone platform as you Customers do not want to be dragged back multiple areas of your dealership, then you are do for a desktop device. To be in sync with a into the showroom for your salesperson to not effectively interfacing with your customers mobile strategy, dealership CPC campaigns enter their information into your dealership to the fullest extent possible. Strive to embed need to go after mobile users with advanced CRM system. Car sales rock stars don’t want to mobile in your dealership customer experience be anchored to their desk when the real action CPC targeting. Mobile-savvy dealership digital and branding strategy. agencies are setting up GeoFencing, Geo is on the lot. Innovative CRM systems are Retargeting, Registered Showroom Visits, and leading with mobile-first components to allow If your dealership is having trouble adapting custom audience segments to capture attention for more efficient data entry and enhanced to this changing mobile landscape, consider and direct mobile car buying consumers to customer contact on the lot. a digital marketing consultant that can help the lot. By using different strategies, collateral, you or hire a new team member with a mobile and mobile site content, these agencies deliver Effective mobile CRM platforms should marketing background. more dealership ROI with their Social Ad increase sales productivity by streamlining campaigns. fresh up data entry and showcase available Mobile digital retailing is the way of the future inventory via social media integration from a and dealerships that don’t embrace mobility Get your service department into the mobile smartphone. The data entry process needs to within their culture and marketing will be left game with geo-targeting too! be seamless and fast with features like driver’s standing still.

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automotivedealer.com.au | AUGUST 2015 | 63 EDITORIAL Australian Automotive Dealer Association IMPROVING AFTERSALES REVENUE

The changing face of cars and the retail automotive industry is making it more important than ever to rethink your after-sales strategy

Sak Ryopponen • Relationship Marketing: do you know If they are not interested in upgrading their your customers well enough to pick the vehicle, your staff should be talking to them Director - Business right marketing partners that will appeal to about available accessories that would bring Development, Go them in your branded communications? the specification level of their existing vehicle Technologies Pty. Interspersing your own aftersales messages Ltd. up (or closer to) the new model. Sat-Nav, with interesting and entertaining partner reverse cameras, parking sensors, the latest marketing messages will help ensure multimedia systems, Lane Departure Warning that your customers stop and read your and Forward Collision Warning are just some communications, rather than automatically ealers are experiencing something of the aftermarket products with current deleting them. Talking to other local approaching the ‘perfect storm’ when it appeal. Dcomes to making aftersales revenue. businesses that fit your dealership’s vision to jointly build local shopping traffic can Overall, a ‘business as usual’ approach to Increased service intervals, capped price help transform the ‘shop local’ message into the aftersales side of your dealership will servicing, improved vehicle reliability ‘service local’. and an ever-increasing list of standard eventually lead to disappointment. Only equipment on new vehicles have combined • When a new model is launched by your innovation in thought, strategy and action will to dramatically reduce the potential for franchise, you obviously contact your protect and enhance this critical area of your aftersales opportunities. All this, combined existing customers. operations. with continuing customer leakage, especially post-warranty, means a rethink about your aftersales strategy is necessary.

So what can Dealers do to counter the threat to critical aftersales revenue?

Here are some ideas:

• The ACCC is understandably taking increased interest in ensuring capped price servicing is indeed ‘capped’. Whilst this may limit opportunities for service upsell, have your service receptionists been trained to identify accessory sales opportunities? For example, leaves or droppings on a vehicle may mean that a vehicle is regularly parked outside, opening the door for window tinting and paint protection. A dent in the rear bumper can start a conversation about installing a reverse camera or parking sensors.

• How are you staying in contact with your customers? Well-designed, interactive SMS and email communications have long replaced plain texting. At the top end, data from plug-in telematics devices provides servicing opportunities based on scheduled service reminders or predictive driver- behaviour-based services.

64 | AUGUST 2015 | automotivedealer.com.au EDITORIAL Australian Automotive Dealer Association THE IMPACT OF BALANCE ON BOTTOM-LINE PERFORMANCE

Greg Strydom Typically overall gross profit levels in This places pressure on overall profitability, Australian dealerships range between 12 to and decreases the likelihood of being able to Head of Client 18% of sales, with the margins available in achieve a decent return on investment. Solutions - Sewells each department playing a significant role Group in driving this performance. Dealers at the The importance of balancing departmental top end of the scale i.e. 16-18 overall GP as a contributions is also exacerbated by a number percentage of sales, rely on contributions from of factors, including declining new vehicle the back-end of the business, with service and margins, increasing reliance on Finance & As the automotive retail business model parts contributing 65% and 25% respectively, Insurance, and the emergence of capped price continues to evolve, the notion of ‘balance’ while front-end orientated Dealers tend to servicing. continues to be raised as a key consideration. achieve lower overall margins. Dealers are constantly reminded that they have In an ideal world, dealerships should be to run a ‘balanced business’ and management Given that around 80% of a dealership’s total looking to structure themselves in a manner theories such as portfolio management and sales revenue will come from the sale of that facilitates a balanced contribution from cost-benefit analysis (which are based on a new and used vehicles and that the available all departments. They should also be aware notion of balance) only serve to reinforce this margins from these departments, will in all of how the business is changing over time. concept. likelihood, be well below 10%, the importance Growth trends should be closely monitored of generating income from the remaining 20% and any changes in turnover should be But what does business balance look like is crucial. matched or exceeded by changes in gross for an automotive dealership, and why is it profit. important? The impact of this can be significant. Dealers who rely on new and used sales, and who In practical terms this means incentivising Balance in a dealership is driven at a gross do not cultivate a healthy parts and service managers for improving departmental gross profit level – most notably, the relationship contribution run the risk of not being able to profit margins and for contributing to the between gross profit and turnover and the generate enough overall income to cover their overall growth of dealership gross profit. It also gross profit contribution by department. expenses. means keeping an eye on fixed ops absorption i.e. the extent to which the gross profit contributions from parts and service cover the fixed overheads of the dealership. By way of example, healthy, volume franchise Dealers should look to achieve an absorption level of around 70%.

There is no magic formula for running a successful dealership, but it starts with strong leadership, a solid business plan and a clear vision for where the dealership should be. In terms of building fixed ops contributions a real effort needs to be made to ensure that retail repair orders are growing, that customer retention figures are improving and that the mix of work that is being done, supports the overall strategy to improve dealership margin.

Finally, as the existing automotive retail business model continues to be put under pressure, there is little doubt that Dealers will have to draw on all their resources, across all departments, in order to come out in front. Balance will be crucial!

automotivedealer.com.au | AUGUST 2015 | 65 EDITORIAL Australian Automotive Dealer Association CLEAN UP YOUR CUSTOMER SATISFACTION AND RETENTION WITH CAR WASHING

Auto dealers can build valuable long-term relationships by installing modern automatic car wash technology However, instead of seeing a carwash • Electronic feedback for brush pressure that Rob Lewis operation as a way to keep the cars on the compensates for brush wear International Sales lot clean, consider car wash as an ancillary • Gantry movement and brush pressure Manager - PDQ profit centre that has the potential to bring calculations coordinated to prevent damage Manufacturing customers to your dealership on a regular • Variable brush-rotation speeds basis. • Sophisticated software to monitor operating Actively working to connect with existing conditions customers should be the first objective when Traditional friction-wash brushes are strips of rustratingly for many auto dealers, great starting a successful car wash program. cloth. While cloth brushes were good in their products do not always translate into day, next generation brushes are constructed long-term customer relationships – the The car wash should become an attraction F using closed-cell foam. Foam is lighter, softer, disconnect between ‘happy customer’ and that brings customers back for a positive quieter and more efficient than cloth, and recurring business often comes down to reason, unlike the ‘grudge purchase’ of vehicle much safer for the vehicle. loyalty. servicing. Car washing can strengthen the positive bond much more frequently than oil Touchless Efficiency Quality vehicles may drive the initial purchase, changes or calendar-based maintenance. but if the customer has no reason to return Another car wash option is the touchless Then there’s the revenue opportunity. If regularly, Dealers can find it difficult to in-bay automatic wash system. A number of you’re willing to use a car wash operation as recapture them later on when they’re ready to recent industry surveys indicate that drivers a resource to hold onto customers, why not buy another vehicle. If the customer is loyal to prefer touchless vehicle washes, which they embrace it as a potential revenue-generating the dealership however, they are more likely to say provide a more efficient high-quality wash opportunity for the surrounding community? become a repeat customer. than friction, without the worry that brushes (Providing that this is allowed in your area of or other moving parts might damage their While the Dealer’s financial success depends operation). vehicle. on its retention programs, only recently have service departments added strategies designed Available Technology Rather than brushes that contact the vehicle, to drive retention and develop loyalty. touchless washes feature an overhead bridge Brush Control that moves a spray arch around the vehicle. Make Loyalty A Revenue Special nozzles apply cleaning solutions, Some ‘friction-wash’ systems still rely on polishes and rinse water to clean the vehicle. Creator hydraulics and air cylinders to control brushes Today’s touchless wash systems offer a as they contact the vehicle. This offers no Maintenance programs can be effective at simple design with easy operation and low sensitivity in the movement of the brush arms keeping customers returning to the service maintenance costs for the operator. and can lead to damaged vehicles due to poor department. A 2013 survey by marketing- analytics firm DMEautomotive, revealed that brush control, and environmental or safety In conclusion, frequency of visits and a 86% of drivers who return to the dealership issues from hydraulic oil leaks. positive experience are critical to paving the road to loyalty for auto dealers. Creating more regularly are also more likely to purchase their Newer car-wash technologies have brought next vehicle from that site. So why not offer reasons for customers to visit a dealership and added benefits to friction cleaning, including: more opportunities at your dealership to build to experience a modern car wash can pay long- loyalty? • Closed-cell foam brushes; meaning less term dividends. weight on vehicles A car wash is a necessity for any auto-dealer The correlation between customers returning • Auto-retract top-brush balancing systems to your dealership and increased loyalty operation, but utilising modern technology to • Sensors for vehicle side positioning cannot be ignored. create new revenue streams and bottom-line • Variable frequency drive control for all impact for an existing operating cost can easily All auto dealers need to wash cars. brushes – no hydraulics pay itself off over time.

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