The Australian Government has promised long-awaited protections for franchised car dealers will be delivered this year, with Prime Minister Anthony Albanese using an address to the Australian Automotive Dealer Association (AADA) this morning to put a clearer timetable on reforms the industry has been demanding for years.
Speaking as the AADA released its 2026 Dealernomics report and marked one year since Labor’s public commitment on the issue, Mr Albanese said the government wanted to move quickly from consultation to action.
“We know that in order to protect consumers from unfair practices, we have to protect dealers as well, and it starts with unfair trading practices,” he said
“After that, we want to take the next step in weeks, not months.”
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Mr Albanese also said the government wanted “any legislation or changes that are required to be done this year”.
The AADA has spent the past year pushing the government to follow through on its commitment to extend protections against unfair contract terms and develop a prohibition on unfair trading practices for franchisees. In the AADA’s media release today, chief executive James Voortman said the industry was still waiting.
“It is therefore absolutely vital that the Government implements the commitments made prior to the election to extend unfair contract terms to all new car franchisees and to develop an unfair trading practices prohibition for franchisees,” he stated.
Mr Voortman said the stakes extended beyond dealer profitability.
“As local new car dealers are squeezed, it will ultimately be Australian customers who pay the price through less investment in local jobs and reduced access for regional communities,” he said.
That argument is valid because while the numbers behind the retail car business are large, the margins are not.
According to the AADA’s Dealernomics 2026 booklet, Australia has 3868 car dealerships, 64,045 dealer employees and 7508 apprentices. The sector generates $21.5 billion in total economic contribution, pays $8.2 billion in tax and duty, and turns over $91.3 billion in sales.
The same report also shows how tight the economics can be. Based on the AADA’s benchmark $100 million dealership, gross profit is $14.0 million, finance and insurance contributes $1.65 million, other income adds $2.65 million, and net profit comes in at $3.50 million, or 3.5 per cent of turnover.
Employee costs alone account for 56 per cent of gross profit. Floorplan interest is 8.0 per cent. Rent is 13 per cent.
Just as importantly, front-end activity dominates revenue, but not profitability. New and used retail and used wholesale sales account for 86 per cent of turnover, while parts and service make up 14 per cent. Yet gross profit is weighted far more heavily to the back-end, with parts and service contributing 47 per cent of total gross profit.
That helps explain why dealers keep returning to the same pressure points with automakers: warranty reimbursements, audit powers, one-sided variation clauses, termination rights and disputes over who carries the cost when something goes wrong.
Mr Albanese directly addressed that part of the business model.
“A dealer should not suffer a financial loss for doing the right thing by the customer,” he said.
He said the government had heard directly from dealers about the difficulty of negotiating with global manufacturers and argued the reforms were aimed at fixing a power imbalance.
In one of the more pointed lines from his speech, Mr Albanese said the goal was to ensure “multinational manufacturers cannot engage in conduct towards dealers that would be illegal if it was directed at consumers”.
That is the political sweet spot Labor is clearly aiming for. The government is not pitching this as a favour to dealers. It is pitching it as a broader fairness reform that starts with franchisees but stretches to consumers and small businesses more broadly.
That was also the AADA’s play today, when it made the case that dealer protections are not just about franchise agreements, but about maintaining local service networks, regional access, warranty support and the infrastructure that remains after brands enter or leave the market.
Mr Voortman said competitive pressure was rising, but profits were not.
“In the past five years, 28 brands have set up in Australia. However, an increase in 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 we’re seeing dealerships closed, and local jobs lost,” he said.
The Dealernomics material suggests that pressure is not only coming from manufacturers.
Its electric vehicle (EV) consumer sentiment survey found 65 per cent of respondents expect to keep their current car for longer due to cost-of-living pressures. Another 65 per cent said their next purchase would be an SUV or ute. Just 38 per cent said they were open to buying an EV for their next main vehicle, while 53 per cent said EVs still cost too much.
That matters because dealers are trying to manage a market facing multiple pressures at once, including more brands, more complexity, softer consumer confidence, and a slower, more price-sensitive EV transition than many policymakers had hoped for.
None of that is relevant to today’s announcement regarding upcoming legislation, but it does change the temperature around the issue. For the first time since Labor’s commitment last year, the prime minister has publicly put a timeframe on the next step and committed his government to getting the work done in 2026.
