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SpinDistribute.com Article Directory

The following article was published in our article directory on December 4, 2014.
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Manufacturers hit back at CarSales Limited

Article Category: Advice

Author Name: Hayley Woodgate

The market dominance of CarSales Limited in Australia is well known is widely discussed, where other car sales sites and car dealerships have attempted to compete aggressively without significant success – however, the car manufacturers are now entering the battle!

A source within the industry has reported that manufacturers are not happy with seeing their brand new cars placed into the price competitive environment that exists on CarSales, or more specifically, the manufacturers do not want to see their latest release cars listed for a price other than the manufacturers recommended sale price. Reportedly, car manufacturers including Holden, Subaru and Mercedes are mandating that dealerships must not advertise brand new stock with a list price less than the manufacturers recommended sale price. If a dealership does not comply than they risk hefty penalties, including punitive damages or loss of license with the manufacturer.

But, isn't this just reducing competition in a marketplace where CarSales Limited invites open competition?

Perhaps, but if we step back and consider it from the manufacturers point of view, if a consumer is interested in a particular manufactures product than the manufacturer would want that consumer to visit their own website for the most extensive information rather than being led astray into an vehicle listing website surrounded with other manufacturers products. Furthermore, if consumers are not visiting the manufacturers website than they are missing out of valuable analytical information and market analysis that comes from website visitor statistics.

It also puts at risk the overall experience that a manufacturer hopes to achieve with a consumer, all the way from visiting a licensed dealership, test driving a vehicle, going through all the options with trained staff, and assisting with the purchase decision making process. Buying a brand new car is meant to be an exciting experience, but buying a car online takes a lot of the fun out of it!

Will this ultimately lead to CarSales Limited (and other competitors within the space) from removing "New Cars" for sale on their website(s)?

This is not likely, but it does add an increased pressure on the revenue model that underpins Carsales Limited's push into the new car sales marketplace. The company already enjoys more than 90% of the online used car sales market which is an intense monopoly, therefore anything that helps prevent a similar monopoly in the new car sales market can only be a good thing for consumers in the long term.

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