The forecasted trajectory of new car sales is unlikely to change post-COVID-19. The fear of public transport and low new car stock availability due to the closure of manufacturing plants overseas have heightened the demand for used car sales and value, but this is a short-term rise unlikely to be maintained.

Motor dealers will be further impacted by:

• The proposed ASIC Intervention order prohibiting add-on insurance at time of sale. Dealers heavily rely on their F&I team to maintain their already slim profit margin on new car sales and are concerned the proposed change will result in onerous or complex obligations and added costs
• The risk of more manufacturers undertaking direct sales (like with Tesla) or restructuring or rationalising their business model, like Mercedes-Benz Australia and Honda Australia.

The industry is hopeful that the introduction of specific motor dealer provisions into the Franchising Code of Conduct on 1st June 2020 that address practices relating to capital expenditure requirements and renewal and termination arrangements, is the first major step in a much needed overhaul of the legislative and regulatory system governing dealer businesses. Major amendments to the Code and other laws are required to better address the unique characteristics of dealer businesses and some of the unfair practices dealers experience in their relationship with their distributor.

FCW Lawyers has extensive experience assisting motor dealers on all their business requirements ranging from selling and buying dealerships to their property leasing requirements and disputes with the franchisor. We are invested in the dealer industry and trusted by leading corporate advisers who are experts in the automotive industry. From our experience helping dealers sell large multi franchise dealerships, we have the capabilities and industry specific knowledge to support dealers through each step of a sale transaction from the offer and due diligence stage through to completion.