The Australian government has promised that long-awaited protections for franchise car dealers will be implemented this year. Prime Minister Anthony Albanese used an address to the Australian Automotive Dealer Association (AADA) this morning to set out a clearer timetable for reforms the industry has been demanding for years.
Speaking when the AADA released theirs Dealernomics Report 2026 and a year after Labor’s public engagement on the issue, Mr Albanese said the Government wanted to move quickly from consultation to action.
“We know that to protect consumers from unfair trade practices, we must also protect retailers, and that starts with unfair trade practices,” he said
“We then want to take the next step in weeks and not months.”
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Mr Albanese also said the government wanted “any laws or changes that need to be implemented this year”.
The AADA has spent the past year urging the government to fulfill its commitment to expand protections against unfair contract terms and develop a ban on unfair trade practices for franchisees. In today’s AADA media release, CEO James Voortman said the industry is still waiting.
“It is therefore absolutely vital that the government implements the pre-election commitments to extend unfair contract terms to all new car franchisees and to develop a ban on unfair trade practices for franchisees,” he said.
Mr. Voortman said the stakes went beyond traders’ profitability.
“As local new car dealers come under pressure, it will ultimately be Australian customers who pay the price by investing less in local jobs and making access more difficult for regional communities,” he said.
This argument is valid because although the numbers behind the auto retail business are big, the margins are not.
According to AADA’s Dealernomics 2026 brochure, there are 3868 car dealerships, 64,045 dealer staff and 7508 trainees in Australia. The sector generates a total economic contribution of $21.5 billion, pays $8.2 billion in taxes and duties and generates revenue of $91.3 billion.
The same report also shows how tense the economic situation can be. Based on the AADA dealers’ $100 million benchmark, gross profit is $14.0 million, finance and insurance contributes $1.65 million, other income adds $2.65 million, and net profit is $3.50 million, or 3.5 percent of sales.
Personnel costs alone account for 56 percent of gross profit. The floor plan interest rate is 8.0 percent. The rent is 13 percent.
Equally important, front-end activity dominates revenue, but not profitability. New and used retail and used wholesale represent 86 percent of sales, while parts and service account for 14 percent. However, gross profit is weighted far more heavily toward the back end, with parts and service accounting for 47 percent of total gross profit.
That explains why dealers keep resorting to the same pressure points with automakers: warranty refunds, inspection powers, unilateral change clauses, termination rights and disputes over who bears the costs if something goes wrong.
Mr. Albanese addressed this part of the business model directly.
“A retailer should not suffer a financial loss by doing the right thing by the customer,” he said.
He said the government had heard directly from traders about how difficult it was to negotiate with global manufacturers and argued that the reforms were aimed at addressing a power imbalance.
In one of the more pointed statements of his speech, Mr Albanese said the aim was to ensure that “multinational manufacturers do not engage in behavior towards retailers that would be illegal if directed at consumers”.
This is the political sweet spot that Labor is clearly aiming for. The government is not presenting this as a favor to retailers. This is a broader fairness reform that starts with franchisees but also extends to consumers and small businesses more broadly.
That was AADA’s concern today as it outlined that dealer protection is not just about franchise agreements, but also about maintaining local service networks, regional access, warranty support and the infrastructure that remains after brands enter or exit the market.
Mr Voortman said competitive pressures were increasing but profits were not.
“In the last five years, 28 brands have set up shop in Australia. However, increasing the number of brands has not resulted in increased profits. If this trend continues, we certainly don’t want to end up in a situation where dealers close and local jobs are lost,” he said.
The Dealernomics material suggests that the pressure is not just coming from manufacturers.
The electric vehicle (EV) consumer sentiment survey found that 65 percent of respondents expect to keep their current car longer due to cost of living pressures. Another 65 percent said their next purchase would be an SUV or pickup truck. Only 38 percent said they were willing to buy an electric vehicle for their next primary vehicle, while 53 percent said electric vehicles were still too expensive.
That’s important as dealers try to navigate a market facing multiple pressures at once, including more brands, more complexity, weaker consumer confidence and a slower, more price-sensitive transition to electric vehicles than many policymakers had hoped.
None of this is relevant to today’s announcement regarding upcoming legislation, but it does change the mood around the issue. For the first time since Labor’s pledge last year, the Prime Minister has publicly set a timeframe for the next step, committing his government to getting the job done by 2026.
