Southern Cross Dealership Report - Episode 2

Hello and welcome to the Southern Cross Dealership Report, your regular summary of things happening to Car Dealerships in Australia.
We've got some major dealer updates, exciting new EV pricing, and even some classic V8 drama that's going to make petrolheads very happy.

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AADA Budget Win Signals New Era of Protection for Australian Dealers

Federal Budget Extends Key Franchising Protections Amid Industry Upheaval

The Australian automotive retail landscape is entering a pivotal phase as new federal budget measures promise to redefine the balance of power between dealers and manufacturers. In what AADA CEO James Voortman calls a significant step forward, the 2025-26 Federal Budget extends protections against Unfair Trading Practices and Unfair Contract Terms to all Automotive Franchised New Car and Truck Dealers.

"Tonight's Budget measures to extend protections from Unfair Trading Practices and Unfair Contract Terms to all Automotive Franchised New Car and Truck Dealers will go some way to address the power imbalance between Dealers and vehicle manufacturers," said Voortman in a recent AADA press release.

This development could not have been more timely. The budget announcement comes on the heels of Holden dealers losing their class action against General Motors for withdrawing from Australia, and Mercedes-Benz dealers appealing to the Full Federal Court over forced changes to their longstanding business model.

The AADA has also welcomed an additional $7.1 million allocation over two years to strengthen the ACCC's enforcement of the Franchising Code of Conduct, adding regulatory teeth to these new protections.

In a sign of the government's commitment to the issue, the Treasurer specifically acknowledged these measures in his budget speech, offering dealers greater confidence in their ability to invest and expand operations in an increasingly competitive market.

Chinese Brands Raise the Bar with Local Engineering Investment

As the competitive dynamics of the Australian automotive market continue to evolve, Chinese manufacturer GWM has made a strategic move by appointing former General Motors Holden engineer and ride/handling expert Rob Trubiani as product engineering manager.

This appointment signals GWM's serious intent to challenge established players through improved vehicle dynamics tailored specifically to Australian conditions. The move follows media feedback about needed refinements in chassis tuning and ADAS calibration across the GWM range.

GWM Australia and New Zealand chief operating officer John Kett emphasized the importance of this localization strategy: "As we grow as a top 10 brand, to make the next step, we truly need to be assimilating into the driving psyche of Australians. The only way to do that is to address the ride and handling (calibration) of our vehicles."

Trubiani brings nearly 25 years of Australian automotive engineering experience to GWM, including 15 years as GM Holden's lead engineer for vehicle dynamics. His expertise in understanding Australian road conditions and customer preferences positions GWM to better compete in the medium to long term.

This development reflects a growing trend of Chinese manufacturers investing in local engineering talent to better adapt their products to specific markets, a strategy previously employed successfully by Japanese and Korean brands.

Dealership Excellence Recognized in Annual BMW Group Awards

The Australian dealership community has much to celebrate following BMW Group's annual Dealer of the Year awards, which recognized outstanding performance across its dealer networks.

South Yarra BMW secured the Major Metro dealer of the year title, while Motorline BMW, Worthington BMW, and Townsville BMW claimed top honors in the Metro, Provincial, and Rural categories respectively. These awards highlight the continued strength of the premium segment despite broader market challenges.

The ceremony also celebrated BMW's position as the best-selling premium automotive brand in Australia for the second consecutive year, underscoring the commitment of BMW's retail partners to deliver world-class customer service and premium ownership experiences.

Industry Braces for NVES Impact as EV Sales Set to Accelerate

Australia's adoption of the New Vehicle Efficiency Standard (NVES) is already influencing product planning and sales strategies across the industry. According to Kristian Handberg, head of future business at EV charge company JET Charge, Australia is now on track to see electric vehicles capture 50 percent of new car sales by 2030.

His outlook suggests that EVs will account for 11 percent of new vehicle sales by the end of 2025 (up from nine percent in 2024), with medium SUVs leading the charge at 17 percent EV penetration. This segment is expected to see up to 10 new EV models introduced in 2025 alone.

Perhaps most significantly for dealerships, the previously EV-barren ute segment is finally electrifying. "JET Charge predicts 12,000 EV utes will be sold in 2025, primarily BYD Shark PHEV but also GWM Cannon PHEV," notes Handberg. With Ford, Kia, KGM SsangYong and others set to join the electrified ute market, dealerships will need to adapt their sales approach and service capabilities accordingly.

Chinese Manufacturers Pivot to ICE Exports in Strategic Global Move

In a notable development that complicates the EV narrative, China is significantly increasing its exports of internal combustion engine (ICE) vehicles, particularly to emerging markets outside the US and Europe.

According to data from the China Association of Automobile Manufacturers, petrol-fuelled cars accounted for almost 80 percent of the country's vehicle exports in 2024, with overall passenger car exports jumping nearly 20 percent to 4.9 million units.

This trend highlights the divergent paths of developed and emerging automotive markets, with the latter still heavily favoring conventional ICE technology due to infrastructure limitations and cost considerations.

For Australian dealerships, this development suggests continued competition across all powertrain types, with Chinese manufacturers likely to maintain aggressive pricing strategies in both ICE and EV segments.

Retail Network Expansion: Cupra Grows Australian Footprint

The Volkswagen Group's performance marque Cupra continues its Australian expansion, with plans to increase its agency-model retail locations from 12 to 15 by mid-2025. Additionally, the brand will expand its service network with seven new maintenance locations to supplement its existing 19 service points.

This growth will particularly focus on outer metropolitan areas and regional cities, enabling greater market penetration beyond capital city centers. The expansion strategically positions Cupra to support its upcoming product offensive, including the Tavascan and Terramar medium SUV models scheduled for May and July 2025 launches respectively.

Looking Ahead: Strategic Considerations for Dealerships

As the automotive retail landscape continues to evolve in response to regulatory, technological, and competitive forces, dealerships face both challenges and opportunities. The extension of franchising protections provides a more secure foundation for investment, while the acceleration of EV adoption necessitates new approaches to sales, service, and customer education.

The growing presence of Chinese brands—across both ICE and EV segments—will continue to reshape competitive dynamics, requiring established dealers to emphasize their points of differentiation in customer experience and after-sales support.

Successful dealerships will likely be those that can effectively navigate this complex environment, adapting their business models while maintaining focus on the fundamentals of customer satisfaction and operational efficiency.

As AADA CEO James Voortman noted regarding the new budget measures: "This gives our members the confidence to invest to continue to provide Australian consumers the vehicles that they love to drive whilst also take on new brands in what is a very competitive Australian market."

The Southern Cross Dealership Report is an Australian news aggregator providing dealership staff with the latest insights on industry trends, regulatory developments, and market opportunities. The report and podcast are created using AI

This article was originally posted to the Southern Cross Dealership Report Substack and has been replicated here with permission.