Applications open soon for the 2024 Automotive Industry Awards, so get thinking about what makes your businesses the best of the best
08 EV INSURANCE
Motorists often find out the hard way that insuring their electric vehicle comes at a hefty price, but why is it and what might it mean for your business?
10 PROTECT YOURSELF
Credit or debit recharges can come as a shock to buisness owners who have done nothing wrong, but knowledge is power so find out how to cover yourself
12 POLICY INITIATIVES
VACC’s Industry Policy team has been hard at work during the year securing better and fairer trading conditions for members, so what’s the latest development affecting you?
14 FUEL CONCERNS
Ongoing wars and unrest have put pressure on the fuel industry and, with ever-rising prices, motorists and business owners feel it every day. Will we have relief?
16 TOUGH TIMES
No importer/manufacturer has experienced more trials in the last decade than Honda Australia: natural disasters, Takata airbags and the move to an agency model, yet they live on
22 AT YOUR SERVICE
Franchise dealer councils can help even the smallest of branded dealers improve the power balance. VACC is here to help interested parties get started
32 BIG CHAIR
Roger Nardi from the Australian Automotive Service and Repair Authority provides an update on this important industry service and how it can help repairers secure their business
38 GET RESPONSIBLE
ESG. What is it and why is it imporant in an ever-changing world where consumers want more from businesses than simple transactions?
44 IN THE KNOW
Getting Technical this issue addresses the common P0171 and P0174 diagnostic codes and steps to narrow down the causes
50 SERVICE DIRECTORY
Find everything from the latest products to the best business services you need, all in one place
52 BUSINESS INDEX
Take advantage of VACC and TACC corporate partnerships and services, and drive your business forward
APPLICATIONS open for the Automotive Industry Awards on 1 February 2024.
Designed to reward the best automotive businesses and personnel in Victoria and Tasmania, the Automotive Industry Awards nominations close on 15 March. We had a record number of entries this year, so get your application in from 1 February.
A standards expert will judge and audit the applications to separate what we expect will be a close field which, this year, re-set the bar extremely high. So, apply for your chance to showcase your achievements, gain recognition for successes and promote your business to existing and potential customers and staff.
The categories for the 2024 Automotive Industry Awards are:
President’s Award Employer of the Year
President’s Award Employee of the Year
Best Small Automotive Business
– Regional Victoria
Best Large Automotive Business
– Regional Victoria
Best Small Automotive Business
– Metropolitan Victoria
Best Large Automotive Business
– Metropolitan Victoria
Best Small Automotive Business – Tasmania
Best Large Automotive Business – Tasmania
It won’t be long until we reveal the best of the best at the industry night of nights: the Automotive Industry
DAVID DOWSEY
YOUR TIME TO SHINE
Awards and President’s Gala Dinner at Crown Palladium on 29 June 2024. On the night, we’ll reveal the Automotive Industry Awards winners, and celebrate the next generation, VACC and TACC Automotive Apprenticeships’ award winners and graduating apprentices.
VACC President Chris Hummer will present two special awards, the President’s Award Employer of the Year, and the President’s Award Employee of the Year. These awards shine a spotlight on people, every business’ most valuable asset. We look forward to a big night when we’ll celebrate excellence in automotive, and have some fun along the way.
Chamber ambassador Shane Jacobson will host the event, and the gala night will be full of entertainment, gourmet food and drinks, magic, music, and dancing.
The Voices Supergroup returns, providing ample time for attendees to let their hair down. The Grand Illusionist Cosentino will keep the audience on the edge of their seats with his unique blend of underhanded skills and nerve racking escapes.
Special thanks to major event partner DENSO, as well as the AIA category sponsors Podium, Commonwealth Bank, OurAuto Insurance, Zembl, Mining and Automotive Skills Alliance and Bendix, for their support in 2023.
Spirit Super, Mas National and SP Tools lead the pack on the apprenticeship front with their sponsorship of all 2023 award-winning graduates. Best of luck to all VACC and TACC member entrants in 2024.
For more information about the awards, key dates and tickets, visit the Automotive Industry Awards website: automotiveindustryawards.com.au
MANAGING EDITOR
David Dowsey
03 9829 1247
editor@australasianautomotive.com
SUB-EDITOR
Jamie Williams
DESIGNERS
Faith Perrett
Gavin van Langenberg 03 9829 1189
creative@australasianautomotive.com
CONTRIBUTORS
John Caine, Geoff Gwilym, Rod Lofts, Michael McKenna, Bruce McIntosh, Imogen Reid, Paul Tuzson
jeaton@ourauto.com.au
of trade practices or fair trading legislation, violation of rights of privacy or confidential information or licences or royalty rights or other intellectual property rights, and warrant that the material complies with all relevant laws and regulations. This publication is distributed with the understanding the authors, editors and publishers are not responsible for the results of any actions or works of whatsoever kind based on the information contained in this publication, nor for any errors or omissions contained herein. The publishers, authors and editors expressly disclaim all and any liability to any person whomsoever whether a purchaser of this publication or not in respect of anything and of the consequences of anything done or omitted to be done by any such person in reliance, whether whole or partial upon the whole or any part of the contents of this publication. Advertising accepted for publication is subject to the conditions set out in the Australasian Automotive rate card, available from editor@australasianautomotive.com
2024 Automotive Industry Awards
Celebrating VACC & TACC’ s
Entering the AIA is a great way to showcase you and your staff’s achievements, gain recognition for your successes and promote your business to consumers.
Award winners will be revealed at the prestigious 2024 President’s Gala Dinner held at Palladium at Crown Melbourne on Saturday 29 June 2024. The next generation, VACC and TACC Automotive Apprenticeships’ award winners and graduating apprentices, will also be celebrated on the night.
Award Categories
• Best Small Automotive Business – Regional Victoria
• Best Large Automotive Business – Regional Victoria
• Best Small Automotive Business – Metropolitan Victoria
• Best Large Automotive Business – Metropolitan Victoria
• Best Small Automotive Business – Tasmania
• Best Large Automotive Business – Tasmania President’s Awards
• Employee of the Year
• Employer of the Year
Key dates
AIA applications open: Thursday 1 February 2024
Ticket sales open: Friday 1 March 2024
AIA applications close: Friday 15 March 2024
Ticket sales close: Friday 31 May 2024
President’s Gala Dinner and AIA winners presentation: Saturday 29 June 2024
Master of Ceremonies
Chamber Ambassador and automotive nut Shane Jacobson will be your host. An immediately identifiable and well-loved actor and presenter.
Entertainment
Rocking the night will be the Voices Super Group – Taxiride's Jason Singh, The Eurogliders Grace Knight and Bernie Lynch, Rob Mills and the Voices Supergroup will deliver you an event to remember.
Cosentino - Award winning Illusionist, best-selling author, Guinness World Record holder and TV show host with over 300 million viewers worldwide. You’re in for a night of illusions, magic, escapes and humour.
Award applications and tickets
I am often asked if insurance cover for electric vehicles (EV) is more or less expensive than for internal combustion engine (ICE) cars –that’s vehicles which run on petrol and diesel fuel to you and me.
Well, while every situation is different, it has been concerning to see several reports which show EV insurance costs could be around 20 per cent more than equivalent ICE vehicles.
In August this year, Which Car reported on a series of comparisons which reflected overall higher prices for EV insurance but suggested prices would come down over time as the EV fleet grew.
This is yet to be seen and may never materialise, especially given repair costs for EVs are generally higher than ICE vehicles and repair times can be around 14 per cent longer than conventional vehicles.
More alarming was a recent report by the UK publication The Guardian, that
EV INSURANCE
cited examples of where EV owners had been told by their insurers they just wouldn’t insure their vehicles.
One Facebook group cited in the article reported insurance costs increasing from 60 to 940 per cent. Now, that’s extreme and could be contingent on a range of background issues but, ouch, that hurts.
So, as the story goes, make sure you shop until you drop when looking for EV insurance. There are plenty of comparison websites to help. Even so, you could be in for a shock you weren’t expecting.
Want to hear more from VACC CEO and acting MTAA CEO Geoff Gwilym? Read his weekly column in The Herald Sun or join him – along with co-hosts Greg Rust and Shane Jacobson – on THE GRILLE podcast. There’s auto news and views, industry insights and trends, special guests, and plenty of laughs along the way. Visit: thegrillepodcast.com.au
JOHN CAINE
CREDIT/DEBIT CHARGEBACKS
AS providers of goods and services in the automotive industry, you likely accept credit and debit cards from various banks and merchant credit providers. You should take the time to read over your current merchant agreement and make sure you, along with your staff, are familiar with the terms, conditions and processes contained within.
A chargeback is like a refund, where a transaction made on a debit or credit card is reversed. It can happen when the cardholder disputes the payment, claiming it was invalid or unauthorised. Put simply, it means that you don’t get paid for the goods and services relating to the transaction even if you’ve already provided them. There’s also a possibility that you may have to pay fees for the chargeback to be investigated and processed. If you receive a dispute and can’t prove that the cardholder authorised the transaction, then you’ll be liable for the chargeback. But sometimes, a chargeback can be fraudulent.
The cardholder’s bank can make a chargeback on the transaction if the:
card wasn’t valid at the time of the transaction goods and services purchases were not received
periodical authority has been cancelled but the merchant continues to debit goods and services were paid for by other means transaction has been duplicated merchant promised a credit that has not been processed goods and services purchased were not as described or defective incorrect amount was charged sales receipt is changed without the cardholder’s authorisation transaction was processed to your own credit card transaction amount is above your floor limit, but this amount wasn’t authorised transaction was made to refinance an existing debt or to collect a dishonoured cheque.
The chargeback process can be outlined as follows:
A dispute is raised against you, the merchant, by the cardholder or the cardholder’s bank.
Your bank receives notification of the dispute and will notify you via email or letter. In the event of a fraudulent chargeback, they may debit your account immediately.
If you disagree with the dispute, you will be asked to provide supporting evidence regarding the dispute reason to your bank.
If the cardholder dispute is resolved in the merchant’s favour, the chargeback request is returned to the cardholder’s bank and the cardholder must pay their statement. As a merchant, you should be aware that if the cardholder dispute is not satisfactorily resolved or supporting evidence is not provided within the required timeframe, the chargeback will remain in place.
Should you wish to further dispute the outcome, the Australian Financial Complaints Authority website provides detail of their services.
IMOGEN REID
INDUSTRY POLICY POSITIONS
AS we move towards the end of the year, it’s important to remember some significant legislative changes that have come into force as 2023 closes out.
From 9 November, changes to the Australian Consumer Law (ACL) and the Australian Securities and Investment Commission Act 2001 (cth) (ASIC Act) will come into effect. These relate to the introduction of several changes to the unfair contract terms laws, which prohibit businesses from proposing, using or relying on unfair contract terms in standard form contracts with consumers and small businesses.
VACC and the Motor Trades Association of Australia have been proactive in educating and preparing members for these changes, which included the preparation of a comprehensive guide with industry specific examples, along with the delivery of faceto-face and online member briefings with legal experts. Changes to these laws now see the introduction of serious penalties for those found in breach, it is therefore vitally important that members educate themselves on these changes and take the time to review their own standard form contracts for any possible violations.
Second, from 1 December 2023, mechanical engineers are required to register under the Professional Registered Engineers Act 2019 (the Act). The Act came into effect on 1 July 2021 and covers five areas of engineering (fire safety, civil, structural, electrical and mechanical), with mechanical being the last
cohort to be mandated. VACC aggressively lobbied to have mechanical engineers omitted from the Act, however, despite receiving support from many of Victoria’s crossbenchers, the Act saw safe passage through Parliament in August 2019.
Members are encouraged to investigate if they meet the qualification and experience requirements to be registered. VACC also advises members to ensure any person working in their business as a mechanical engineer is aware of the new requirements under the Act. Additionally, the requirements associated with continuing professional development (CPD) for renewal is 150 hours every three years. VACC will work with members to understand what additional type of training or professional development would be beneficial and assist with the meeting of these CPD obligations. For eligible members who are yet to register, visit the Business Licencing Authority website to commence the registration process as soon as possible. In other policy work, VACC has been active in opposing the call by consumer facing organisations for an industry-funded Lemon Law Ombudsman. VACC sees no evidence to support its establishment and argues that promoting the purchase of a motor vehicle from a LMCT, which includes various protections under the ACL, would be more advantageous to consumers. This is compared with the systemic issues identified from private-to-private sales, which offer little-to-no consumer
protection. An industry report is available to members, which details VACC’s own evidence that effectively demonstrates LMCTs are not at fault for the cost blowouts and delays in the Victorian Civil and Administrative Tribunal (VCAT). Delays and overwhelming caseloads are best supported by additional resourcing, as VACC has long argued.
Finally, the National Transport Commission has announced a review of Vehicle Standards Bulletin (VSB)14, which relates to vehicle modifications. This review will also take into consideration electric vehicle conversions. VACC is out of the blocks and has established a working group to advise on the necessary changes. If any member would like to be involved, please reach out. The policy team has also contributed, and led responses to a number of federal level consultations, including a response to the Franchising Code Review, Treasury’s Review of the Personal Property Securities Act 2009, the National Heavy Vehicle Regulator’s Riskbased Heavy Vehicle Inspection Scheme discussion paper, and the National Transport Commission’s review of the Heavy Vehicle National Law to name a few. The team is now finalising its response to the Victorian and Federal Pre-budget Submissions.
Thank you to all the members who have contributed to VACC’s policy work over the course of the year.
Download 'Unfair contract terms in the automotive industry: Everything you need to know' from the VACC website.
RECENT developments in the Middle East will certainly cause pain at the pump in the coming weeks and months.
While we fear for innocent civilians in the war-torn regions, as motorists we should also expect higher crude oil prices here, which will push up petrol and diesel prices.
Experts forecast the current price for a barrel of oil to rise from US$88 to US$100.
That’s bad news in the run-up to Christmas and for inflationary stretched household purse strings.
After Russia advanced on Ukraine last year, oil prices dramatically increased nearly 30 per cent to a staggering $US128 a barrel.
The hike in fuel costs has a serious flow-on effect for us all.
Higher fuel prices will nudge up inflation and compromise the recent relief of months with no interest rate rises.
Spare a thought for the trucking
BRUCE MCINTOSH
FUELLING CONCERNS
companies hauling our consumables across the country, our fruit and veg, your new couch...
Pain at the pump is likely to push up prices at the supermarket too. All the more reason to shop smarter for your fuel.
I’ve previously encouraged you to download fuel price apps on your smartphone. This is another great reason why you should.
According to the Australian Institute of Petroleum, over the last two months, Tasmanian motorists paid an average of $2.30 per litre for unleaded petrol. Have we become complacent about paying over $2 per litre for fuel? I certainly hope not.
I long for the day when pain at the pump eases (and for humanity to become more… human).
Want to hear more from Bruce? Read his weekly column in the Mercury.
JOIN THE TEAM AT SHEPPARTON BMW.
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You will be working in a state-of-the-art workshop with brand new equipment including your own dedicated service bay with tool storage.
With a consistent training plan to advance your career and in house support from management, we want to help you grow with us while working in the best conditions.
Our workshop is fully airconditioned for the summer months and built in gas heaters for the colder winter months as just two of the qualities you can expect to enjoy when working at Shepparton BMW.
For the right candidate, we will also have a $3,000 Sign on offer applicable to assist with extra tools or even moving costs if you are not from the area*.
Contact the Service Manager via email for more information – service@sheppartonbmw.com.au
Shepparton BMW Goulburn Valley Highway, Kialla. Ph (03) 5823 2940. sheppartonbmw.com.au LMCT 11720
*$3,000 Sign on bonus paid in two instalments, $1,500 paid after 3 month probationary period concluded and $1,500 paid at the end of first 12 months from original starting date.
Riding out the tough times
IT’S fair to say Honda Australia and those associated with it – including current and former dealers – have been through a trial, and no one knows this better than managing director, Carolyn McMahon.
She has well and truly paid her dues, having joined the company almost 30 years ago as the personal assistant to the then-managing director. Since then, she has worked in major areas of the business, including human resources, various senior sales leadership roles, corporate secretary, chief operating officer and director. Over the decades, she has witnessed a lot of change, but nothing as dramatic as what Honda Australia has experienced in the last few years.
In that time, Honda has seen the Takata airbag situation, floods in Thailand and earthquakes in Japan that severely affected supply, COVID, the amalgamation of Honda’s automotive business with its motorcycle and power
equipment division, and the move to an agency model, which impacted numerous long-standing dealers.
The company continues its push into the more lucrative SUV and hybrid markets.
So what has McMahon learned from these experiences? Plenty.
McMahon: “I spent many years in HR, coaching managers in the business.
My view on HR has changed from one of management to one of leadership, which has given me a strong foundation.
The way that you treat people – your leadership shadow – can have a big impact on the quality of people that you have and how well your team performs.
“[My experience at Honda] has been invaluable. It allows you to make connections, to see patterns and see upstream and downstream impacts, because you know how every area works and if you tweak something here you have to consider other areas as well.
“Being able to understand the total business helps you inform and guide teams to look out for potential problems. It also helps you value what each area of the team brings to the business. Maybe some areas of the business feel undervalued because they’re not in the spotlight or in front of the board every day. But I know what everyone does, so I can validate and express thanks for what they do, although they may be the unsung heroes.”
Did she have doubts about the agency model?
“To be honest, not really. Throughout my career, I’ve had lots of things happen. I’m pretty good in a crises. It’s just about having a plan, making sure everyone understands the plan and being confident that we’ll get through it.
“Curveballs happen all the time and if you shy away from them it only makes it worse. Having a strong emphasis on leadership and diversity means
that, as a team, we can lean into these things together. It’s not the one person out the front, it’s the whole team. I’m so proud of our team because we have been through so much together, but we have done it so well.”
Leading Honda’s product line-up refresh is the new sixth-generation CR-V. It’s a proven formula that has moved 13.5 million units around the globe. This time, it’s longer and wider and really looks the goods.
The range includes two and four-wheel drive variants with five or seven seats in petrol and hybrid powertrains, with a price spread between $44,500 and $59,900. CR-V has a premium feel, even in the lower trim levels and the hybrid, particularly, provides super-smooth motoring for active families.
The new CR-V range is part of Honda Australia’s push into higher quality motoring, according to
McMahon, and the move to an agency model is all part of the plan.
“If we want to establish a more sustainable quality business, what does that look like?", said McMahon.
“Agency was one part of a bigger transformation that we took. We wanted a more sustainable business going forward. We didn’t want to continue in the heavily discounted, very low margin game.
“The agent has a much different role [now], albeit they are still selling cars, but there are different roles and responsibilities. They no longer have huge floorplan costs. They are more focussed on the customer experience and don’t have to worry about other things.
“We now have a nice balance between value for customers and sustainability. We are not so much an importer at the peril of huge currency fluctuations. Previously, we had a very broad range of product; we have a nice, tight product line-up
now. That mitigates some of that risk.”
What else has changed?
McMahon: “Some of the lower priced models that we used to have were not viable for us. We want to provide more of that premium feel but underpinned by the quality product that Honda has always had.
“Now our product line-up has shrunk a bit, we have been able to include important safety features across the line-up. It’s about good value for customers and a top experience as well.” It has been a long and at times difficult journey but McMahon has had good people around her for guidance. All these years later, she still recalls with laser focus the advice she received from a mentor that changed her professional life forever.
“Someone told me: 'Your voice is important. Don’t be shy to share what you think'. Ever since, they haven’t been able to shut me up.”
TOUGHER BIKIE THAN A KANGAROO IN A BAR FIGHT
EXEDY Safari Tuff clutch range is precision engineered to deliver cutting-edge performance in the most demanding driving conditions.
Dealer council call
Farm machinery, motorcycle, truck, and vehicle service and repair franchise dealers must form their own brand dealer councils. VACC can help.
Over the past few years, much has happened within the automotive retail franchising sector that has impacted the relationship between the franchisor (the manufacturer/distributor/importer) and franchisee (dealer/agent). The dealer-manufacturer relationship is often one-sided and does not take into account the best interests of the franchisee, the franchisee's customer and the franchisee’s local community. What issues does VACC see that impact farm machinery, motorcycle, truck, and vehicle service and repair franchise dealers?
VACC has seen a marked increase in franchisors terminating farm machinery dealer agreements, then presenting franchisees with new agreements which include terms that may be in breach of the Competition and Consumer Act 2010. VACC is awaiting legal opinion on those agreements and will seek the attention of the Australian Competition and Consumer Commission (ACCC) based on the outcome of that advice.
Other common themes VACC sees regularly relate to:
The post-pandemic supply chain issues that severely impacted consumers and dealers.
• The return of pre-pandemic supply traits of some brands in the oversupply of motorcycle, farm, and industrial machinery to their franchise dealer network.
Unrealistic market share expectations by the franchisor.
Unrealistic retail pricing.
Lack of support for the provisions of adequate skills, training, and assistance with labour hire for franchise dealers.
Unilateral franchise agreement variation.
Subsidiary documents, such as dealer operations or warranty manuals that franchisors amend unilaterally on an ad-hoc basis via the release of manufacturer bulletins.
No collective bargaining opportunities between franchisor and franchisees.
Service campaigns and the impact on dealers and consumers.
Exclusive product distribution.
Manufacturer indemnity with regards to manufacturing defects.
The absence of independent dealer councils in the farm machinery, industrial machinery and motorcycle, truck, and vehicle service and repair franchise dealer sector.
Many issues could be resolved in a larger forum of same brand dealers. There is limited positive outcome by dealing individually. A dealer council is the best way to have a united and powerful voice.
The good news is there are several brands from the various sectors that have an active dealer council and coordinate with great efficiency and professionalism with their franchisors. Those franchisees and franchisors should be congratulated. However, there are many ‘main line’ and ‘short-line’ farm machinery and motorcycle dealers who have no formal dealer council structure, and are actively discouraged by their franchisors from participating in or establishing a franchise dealer council. Be aware that under Section 33 of the Competition and Consumer (Industry Codes— Franchising) Regulation 2014, it is prohibited for franchisors to restrict or limit the freedom of franchisees and prospective franchisees from forming an association or from associating with each other. To do so may result in a fine of up to $10 million for the franchisor. An individual can also be penalised up to $500,000 for a breach of this section.1
How VACC members see the role of franchise dealer councils.
The best franchise dealer councils are those run independently of the franchisor and have a non-dealer as chair. The dealer council has direct dialogue with the franchisor, but the agenda and deliverables are set by the dealer council. The dealer council does not exclude the franchisor from attending meetings, but the franchisor can attend by invitation of the chair to join a franchise dealer council meeting to address a specific agenda item. This helps feed or accelerate the views of the franchise dealer network to the senior leadership teams at the franchisor and helps improve the performance of the network for the benefit of the franchise dealer, the franchisor, and the consumer. Does your brand have a franchise dealer council? VACC can help you establish a franchise dealer council.
If your brand has a franchise dealer council and you require assistance from VACC or the Motor Trades Association of Australia (MTAA) with legislative or regulatory issues, reach out to Michael McKenna at VACC. If your brand does not have a franchise dealer council, VACC and MTAA can help
you establish one. You should consider the benefits of forming a franchise dealer council for your brands. The Franchising Code is under review to measure the performance of elements of the current code. VACC has received great support and contribution from farm, industrial, motorcycle, truck, and vehicle service and repair franchise dealers to form a response to that review. With the code due to sunset on 1 April 2025, it is important that collective views of your brands are consistent and captured in a formal capacity (a dealer council). What assistance can VACC and MTAA offer your brand to establish a franchise dealer council?
Assistance from VACC will be a value add to your VACC membership.
VACC will act as secretariat for your franchise dealer council for the first year of its operation.
VACC can provide advice on what legal and formal structures a franchise dealer council should undertake, including the most suitable legal representatives for this purpose. The ACCC has made a class exemption which allows eligible businesses to collectively bargain without breaching the competition laws. VACC can help your brand apply to the ACCC for a class exemption. It is noted that there is not a single group that represents farm dealer, industrial machinery, motorcycle dealer or vehicle service and repair franchise system listed as having lodged a notice with the ACCC for a Collective Bargaining Class Exemption. This must change.
• VACC can ensure all legislative obligations under the CCA are followed and adhered to.
VACC will assist dealer councils with meeting agendas, minutes and other administrative tasks.
VACC will be the initial point of reference for your franchisor to liaise with a dealer council.
VACC can host meetings at 650 Victoria Street North Melbourne. There are good reasons why your brand should form a dealer council. The opportunity to work with your manufacturer/distributor/ importer for better outcomes for all stakeholders is a key reason, along with the potential to access collective bargaining. Contact Michael McKenna via mmckenna@vacc.com.au for a confidential discussion on how VACC can assist with establishing your franchise dealer council.
1. Under Section 5A of the Regulations
Podium is powering the Australian automotive industry into the future. Australia’s leading text messaging platform is helping over 100,000 businesses communicate with customers, schedule services and collect payments – all through the power of two-way text.
"Podium is so good that we have cancelled our traditional eftpos machines. I’ve never been more impressed with a software provider, and can’t wait to see what features Podium releases next."
Justin Walker, General Manager, Grant Walker Parts
How pricing might save the franchise dealer sales model
WORDS Steven Bragg, Partner –Motor Services Industry Lead, Pitcher Partners, Sydney
SUPPLY chain pressures easing and waning demand have led Tesla and other original equipment manufacturers to make price cuts to electric vehicles – and these cuts may have a significant ripple effect on the new and used car industry. While it’s good news for new customers, dealers and fleet buyers are feeling the pressure because elements of the favoured model for electric vehicles (EV) sales, agency and direct-to-customer (DTC), hamper responsiveness to the market. There is an argument to be made for switching the retail sales model to a franchise model, the structure most dominant in the market until COVID hit.
As COVID disrupted trading and supply chains, EV demand significantly outstripped supply and inadvertently created the perfect model for DTC sales. Prices were set and, until recently, customers were happy to wait for their EV to be delivered. By August 2022, used EV prices were inflated and, in some cases, higher than the purchase price of a new EV. But that scenario was too good to last and the EV market has evolved in recent months.
As new car prices began to drop, existing EV owners found their vehicles were less valuable and this fallout also hit fleet management organisations (FMOs).
FMOs do not typically get bulk purchasing discounts, which makes them particularly vulnerable to OEM price cuts because of the way these companies secure finance. Loan to value ratio (LVR) covenants are tied to residual values of EV fleets.
With every EV price cut, the impact on the LVR would force FMOs to inject cash and reduce the loan balance outstanding, which has pushed some FMOs to the brink.
As a result of these price cuts, prospective buyers of new EVs became less inclined to accept the current sticker price and delayed their buying decision, which led
to stock piling up and further price cuts until the price reaches a level the customer is happy to pay.
Customers were now conditioned to wait for further pricing cuts before making a purchase, which exacerbate losses that OEMs incur and in the meantime, FMOs kept stumping up more cash to avoid breaking their loan commitments.
Subsequently the OEM carries the entire balance sheet risk in a DTC and agency sales model, risks that haven’t been exposed as the market boomed. But through the franchise model, an OEM can set a recommended sales price and sell the vehicles to its independent network via floorplan financing, which transfers the inventory balance sheet risk to the dealer network.
Another advantage to the franchise dealer sales model is the buffer it provides for OEM factory production and against struggling models.
The breakeven production point for almost any car factory is 80 per cent and OEM factories want to produce EVs at this level or higher every day of every month.
Inventory piles up when demand drops but independent franchised dealers buffer the factory’s inventory from most demand fluctuation factors, such as weather, holidays or economic downturns.
When the inevitable rotten egg model comes along, independent dealers can more effectively exit unwanted car models better because of differential and dynamic pricing.
Under an example of a DTC sales model, there might be 10 units in inventory priced at $100 each and the breakeven production is eight units. When there is demand for 12 units, the price might be pushed up to $110 per unit and the revenue increases from $1000 to $1320, well in excess of our breakeven of $800.
But if the reverse happens and there is only demand for eight units, under the DTC model there might be a price cut to $80, increasing demand to 10 units to reach the breakeven.
Given this, how does dynamic pricing work under an independent franchise dealer sales model?
The OEM sets the recommended sales price at $100 and provides the dealer a
margin of $10, which they can apply however they see fit to sell the EVs
If customers are happy to pay $100, the dealer gets $10 margin, but if the customer thinks their trade is worth more than the market, the dealer can reduce the margin by $2 to induce the transaction.
The OEM gets 10 or more vehicles sold at $90 or $900 revenue, and the recommended sales price is maintained, which ensures the residuals of current EV owners and the LVRs on fleets are not impacted.
A dealer might end up charging 10 different prices to 10 different customers but it doesn’t undercut the market because the market doesn’t know the actual selling price.
Now, differential pricing might sound like a lack of transparency in the selling price, which is an understandable perspective – but the DTC and agency model price changes made publicly severely undercut people who brought a car at a higher price, including fleets. The moment that sales are made at a lower price, and those changes are publicised, buyers have lost a significant amount of value in their vehicle. The franchise dealer system is defending a massive loss of wealth across the market.
The discussion around the merits of new-car sales channels often takes the top-down view, from the customer back to the supply chain, rather than bottom up factory-to-consumer perspective.
Undoubtedly, what the customer wants is crucial to the sales equation but it is not the only factor and the missing piece in the debate is often the reality of car production.
The last six months has seen a shift, with EV production ramping up and demand coming off the boil, and this evolved landscape might just be the saviour for the franchise distribution system. If demand is elastic, an OEM is likely to get more revenue and sell more cars with a franchise model and while some cars may be sold at a loss, the overall sales picture may be healthier.
RODGER NARDI
CEO AUSTRALIAN AUTOMOTIVE SERVICE & REPAIR AUTHORITY
Rodger Nardi has over 20 years’ experience in the automotive industry working with SPX/Bosch Service Solutions, focussed on workshop diagnostics and equipment. Rodger managed their aftermarket division for APAC and had a stint with Bosch in the USA. He returned to Australia to take up a national role for Autodata. He provides Australasian Automotive with an update on AASRA, a major initiative aiming to provide a level playing field in the automotive industry...
What is AASRA’s function within the automotive industry?
AASRA is the Scheme Adviser for the Motor Vehicle Service & Repair legislation. This is unique in that an industry body has been appointed for this role. AASRA’s core function is to deal with day-to-day operations of the legislation. We publish each car company’s Scheme Offer which is their pricing for manuals, wiring, repair procedures, diagnostic hardware, and software. Their Scheme Offer pricing is by day, month, or year. Much of our daily workload is assisting workshops with questions, solving problems or, where possible, assisting them in accessing scheme information.
Who are the AASRA board of directors and what are their roles in the industry?
The board of directors is made up from four industry organisations, being:
Stuart Charity – Australian Automotive Aftermarket Association, CEO
Brian Savage – Australian Automotive Dealer Association, Deputy CEO
John Khoury – VACC, Industry Policy Adviser
Richard Delplace – Federal Chamber of Automotive Industries, Director Emerging Technologies
Alternative Directors:
Lesley Yates - Australian Automotive Aftermarket Association, Director of Government Relations & Advocacy
James Voortman - Australian Automotive Dealer Association, CEO
Tony Weber - Federal Chamber of Automotive Industries, CEO
What role did AASRA play in the Right to Repair legislation?
AASRA was formed because of the legislation. Prior to then, we were a twinkle in the industry’s eye. Some manufacturers are yet to comply with the legislation. What is AASRA doing about this?
Part of AASRA’s role is working with the ACCC and, where needed, refer car companies for possible investigation and penalties. These referrals have been occurring during 2023 and are made public by the ACCC once they have reached a determination. The main two areas yet to be fully resolved are diagnostic software pricing by day and month and J2534 pass-thru access. Key and immobiliser code access in a timely manner is a current focus. What support does AASRA offer its subscribers?
Nearly every car company page on the AASRA website has a ‘Support Link’, which is how a workshop can ask a car company any question. When the workshop doesn’t get a prompt answer from a car company, AASRA will make contact at a different level to help speed up the answer.
Does AASRA have access to panel repair procedures?
No, AASRA is not an Australian repairer, so we don’t have access. Where possible, we post a navigation PDF near the top of each car company’s AASRA page. We have been able to post navigation PDFs for the following: Honda, GM, Hyundai, LDV, Genisis, Ford, Nissan, Mazda, Isuzu, Alfa Romeo, Chrysler, Dodge, Jeep, RAM, Fiat, Peugeot and Citroen.
With access to OE manufacturers, can AASRA subscribers obtain pass-through information for reprogramming?
The legislation requires the same service and repair information provided
to dealerships be made available to the aftermarket. SAE-J2534 or ISO22900 is included in the legislation-related documents. AASRA highlights J2534 VCIs on each brand’s AASRA page. Pass-thru is still a work in progress, as this is related to diagnostic software
companies that require EV training to access anything on their websites, as they can’t separate the high voltage information. These are BMW, Jaguar, Land Rover, Mercedes-Benz and Volvo.
Why should a repairer subscribe to AASRA?
The level of a workshop’s profit is determined by how efficiently they complete jobs. A workshops major revenue producing stream is time. You could spend 30-minutes on Google trying to solve a problem at no apparent cost. Add those 30-minutes up over a month or year, multiply this by your hourly rate to see what googling is really costing you. It’s far better to buy a day’s subscription to access the genuine information or run the genuine diagnostic software across a problem car. The subscription fee is allocated to the job and the time saved allows you to move onto the next vehicle. The other important reason to join is technology. More and more of the repair involves software (programming, re-flashing), which is now available to aftermarket workshops.
What roles did you have before becoming AASRA’s executive officer?
I have worked in the automotive industry for over 20 years, predominately involved in equipment and diagnostics. This has been with Bosch Service Solutions (formally SPX) in Australia and the USA, Autodata and Repco.
What’s the best piece of advice you have received?
Two come to mind: Don’t forget where you parked in a heavy snowstorm; and don’t ask a Texan if they own a gun.
Any individuals employed by Australian repairers or Registered Training Organisations.
What information can be accessed?
Service schedules, service manuals, service bulletins, repair procedures, wiring diagrams, diagnostic hardware, software etc. Key, immobiliser and radio codes require VSP* status.
The legislation covers vehicles (cars, SUVs, light commercial) from 1 January 2002 onwards.
Collision repairers, locksmiths*
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What is it? Why is it? Should you care?
WORDS Paul Tuzson
THESE days, it’s more widely appreciated that companies don’t, or at least shouldn’t, operate in a societal vacuum. The actions, products and services that form a company’s activities have broader effects than simply maximised profit and companies are under pressure to account for those effects. ESG is said to be the means of doing so.
ESG stands for Environment, Social and Governance. It constitutes a means of labelling and quantifying the social and environmental consequences of commercial activity. An ESG policy presents an organisation’s strategy for managing and controlling such consequences. Effectively, it’s a system for assessing social responsibility and decency among businesses.
Having an ESG policy has become all the rage in corporate circles. It’s also starting to become an identifier available to smaller enterprises for assessing the social suitability of all companies offering products and services. Some analysts suggest, on the Gartner Hype Cycle, ESG is starting to climb out of the Trough of Disillusionment, move up the Slope of Enlightenment headed for the Plateau of Productivity. Maybe.
The E, or Environmental aspect, of ESG is self-explanatory: don’t do anything to harm the environment. Who could oppose that? However, a strong ESG policy would go a step further and suggest a business entity should limit commercial association with suppliers to those with appropriate ESG policies. For instance, a large service centre handling the fleet maintenance and service requirements of another large company might find its ESG policy called into question by that customer. Conversely, that service centre may choose not to take the work of a company with poor environmental practice. While the example above is not very realistic at the moment, it is what some
would like to see. The ISO Net Zero Guidelines, for instance, recommend in section 9.2.2 that technology and service providers committed to robust net zero targets should be preferred. However, this is far from the only thing of note in the ISO Guidelines. They are comprehensive and it must be said that many of the recommendations are reasonable if implemented sensibly. A search for IWA 42:2022(en) will find them. Although relegating cost/profit considerations to second place behind environmental concerns seems commercially counter intuitive, ESG considerations are on the rise. The NAB, for instance, has a range of lending restrictions for large customers with unsuitable ESG policies, or which do not match a range of other guidelines like the Equator Principles (EPs). The Equator Principles form an international set of precepts that banks and financial institutions use to assess the environmental and social credentials of potential borrowers. EP
assessments are a consideration in large lending and investment decisions. However, increased sensitivity to ESG related matters is not restricted to the big end of town. The Commonwealth Bank has teamed up with a company called CoGo. The eventual aim of the collaboration is to track the carbon footprint of individuals’ itemised purchases and suggest offset strategies to compensate for activities like driving a car and other carbon dioxide producing activities. Westpac also has a CoGo linked program. Is anyone else nervous about having banks track and rate individual purchases?
It takes more than just equipment to make a successful workshop. An ESG policy is set to become ever more important (left). At the end of their lives, disposal of vehicles in an environmentally sound manor is challenging. This is one aspect of what the environmental part of ESG is about (above). The Gartner Hype Cycle. People suggest ESG is on the slope of enlightenment headed for the plateau of productivity. This may be so, but we’ve also seen various business practices fall out of fashion over the years (below)
image: Jeremy Kemp, Wikipedia
The CBA also offers a Sustainability Action Tool, which, according the CBA website ‘... is designed to help small business customers identify sustainable choices for their processes and operations ....’ So, that’s good. However, CBA spokesperson for the program Kerryn Saward said (among other things): “They also want to be empowered with information and knowledge that can lead them in the right direction to aligning themselves with the right businesses”. It’s true banks profess high motives for these arrangements and entry into these schemes is voluntary. Also, there’s no penalty involved in nonaction on resultant carbon footprint analyses. The perfectly legitimate question, though, is if this will always be so? Such programs and the increasing enthusiasm for them from the public is food for thought. Individuals may be relatively insignificant, but individuals en masse can and do affect markets.
Cynics might suggest the embrace of such environmentally sensitive practices by banks is more a matter of presenting an environmentally sensitive facade rather than genuine environmental concern. However, even if that were true (and we’re not saying it is) banks would only be concerned about doing so because it had become important. And if these things are of increasing concern to individuals, perhaps businesses of all sizes should also be concerned. However, for perspective, it’s important to remember almost everyone does almost everything for more than just one motive. It is entirely possible, and indeed probable, that bank/CoGo and similar schemes are fuelled by both PR benefits and environmental considerations.
The good news is practices linked to the E section of ESG can be relatively easy for automotive businesses to achieve. They can be covered by simple, broad statements like those from NAB’s own ESG Risk Principles paper, which reads: “We will consume resources responsibly, look for opportunities to minimise both the direct and indirect negative environmental risk and impacts from our operations, products and services.”
That’s it, short and simple. In the broadest terms, most ESG principles are commonsense practices anyway and if not, they’re probably covered by regulations.
The automotive industry is rife with opportunities for causing environmental harm. Coolant, oil, filters, fuel, refrigerants, panels, plastic components, tyres, paints, thinners, solvents can all cause environmental harm if disposed of improperly. Used batteries also belong on the list, but they’re usually picked up for recycling when new ones are
Diversity of sex, gender and race are all part of an ESG policy suited to an automotive workshop (above)
delivered. However, the other things mentioned generally call for specific arrangements with either licensed or environmentally responsible collectors/recyclers. According to ESG dictates, checking the credentials of a recycling service is as much the responsibility of the business using the service as it is for the recycler’s compliance.
Below L-R: Fresh coolant is essential, but so is disposal of used coolant. It can be tipped down the drain with permission from a local water authority depending on the type of glycol it contains. Without a permit, it must be disposed of as a Prescribed Industrial Waste (PIW).
Unlike oil filters, used air filters can go straight in the bin.
Of course, we all know the regulations around air-conditioning gasses.
Batteries are highly recyclable and having them picked up when new ones are delivered is very convenient.
The S in ESG represents the way in which a company treats its employees. In old-speak, the term equal rights summed up this aspect of employer/ employee relationships, particularly for women and also between different races. However, these two categories are no longer enough in and of themselves.
Above L-R: Ensuring all employees have proper safety equipment and operate according to defined procedures falls under the governance section of an ESG policy (far left). Proper workplace governance creates happy employees and happy employees are productive employees. Proper disposal of oil is an environmental issue. Download the VACC Automotive Environmental Guide for details of environmentally sound workshop practice
Currently, there’s a whole slew of letters that represent sexual orientation and gender possibilities and these must also be included. LGBTQIA2+ is the latest string, which translates as Lesbian, Gay, Bisexual, Transsexual, Queer, Intersex, Asexual and Two-Spirit. The + represents a place holder for other possible letters as new categories are recognised. We don’t really need to get into the definitions of each of these categories. Equality is the point and it seems, as far as women and race are concerned, the automotive industry isn’t terribly biased in the workshop these days. It’s certainly true that the number of men compared with women on the tools is massively disproportionate but that’s because there aren’t as many women with the relevant trade qualifications. Where there are, we have seen women and racially diverse trades people readily employed and accepted in workshops. They’re also paid equally. Failing to do so has been illegal in Australia since 1969. As far as LGBTQIA2+ mechanics, panel beaters, painters, auto-electricians and similar automotive trades are concerned, there just aren’t that many with automotive qualifications; not at the moment, anyway.
Gender equality in the workplace is more complex than equal pay for equal work. The Sex Discrimination Act of 1984 delineates many areas of possible sex discrimination, or bias. These include: job offers, terms and conditions of work, opportunities for promotion, incentives, training, dismissal, or any other detriment. Obviously and also importantly, sexual harassment is out.
Getting rid of sexual harassment and unlawful sexual discrimination is a heavy management obligation, so reporting both is legally essential, not to mention the moral obligation. Australia also has the Workplace Gender Equality Act 2012 and compliance with it is administered by the Workplace Gender Equality Agency, or WGEA. It calls for enterprise-wide reporting on gender relevant factors for organisations with more than 100 employees. So, many automotive businesses are exempt because they have less than a hundred employees. However, as companies with 100 or more employees would know, a yearly report is required. Under the obligation to report, remuneration of CEOs, Heads of Business and some managers must be publicly disclosed after April 2024 for inclusion in gender pay gap calculations. And progress in gender pay gap reductions are mandated by the Workplace Gender Equality Act 2012. Failure to demonstrate improvement in relation to a specified base period constitutes failure to comply with the Act. Also, remuneration confidentiality requirements in employment contracts will be banned from next year.
Gender pay gap calculations are simple, but the data feeding into them makes it a complex matter. Raw data from the ABS on hours worked between males and females is extensive and breaking it all down is a considerable task. However, for businesses with less than 100 employees, the matter of gender pay gap becomes simple. Pay your employees performing the same
work the same hourly rate, which is a legal requirement that’s common knowledge. Any bonuses should be commensurate to work performed and available to all, equally. Bias, either conscious or unconscious, in offering employment opportunities must be avoided. The best policy is to concentrate on two things: qualifications and experience. Can the person perform the work? Anything to do with sex or gender (or any LGBTQIA2+ issues) should not be considered despite any lingering prejudices.
A list of simple, single statements about equal pay, equal opportunity to earn bonuses and promotions, equal work conditions and equal opportunity in general for all without consideration of sex, race, gender or sexual orientation should be adequate for the S in an ESG policy at this time. There is, however, pressure from some quarters to actively employ minorities as a strategy for evening out disparity of opportunity. This is known as DEI (Diversity Equity and Inclusion). The automotive industry is relatively immune from such pressures at this time. There simply aren’t enough LGBTQIA2+ mechanics to go round, although it must be said that there’s an increasing number of automotive tradespeople from different racial groups. That just leaves the G, or Governance section of ESG. Really, this is just about the way management/owners govern the activities of a business. Poor governance can be a real problem. If, however, you are a reasonable person, good governance is all about creating a harmonious work environment in which employees feel comfortable, enabled and valued. It’s also about making sure business activity conforms with the principles defined in the E and S sections of your ESG policy. Again, simple, broad statements to that effect are about all that’s needed in the G section at this time. There are also the benefits of adopting the RUOK program and extending its principles across the entire working year. Demands for more comprehensive ESG policies may come upon us in the future. For now, though, simply being able to point to a fully formed, if simple, ESG policy on your website when asked for one will be enough. In the end, an ESG policy is really about the codification of decency. Decent people may not need one, but it can serve to communicate the principles of a business before a customer even sets foot in the door.
Catalytic converters are also recyclable (top right). Tyres constitute a problem, but new uses for the recycled pellets are found all the time (centre right). At end of life, the constituent parts of vehicles can pose a problem if they’re not disposed of properly. Making sure they are is part of a valid ESG policy for businesses handling them (right)
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P0171/P0174: DIAGNOSTIC CHECK LIST
P0171 and P0174 are among the most common diagnostic codes VACC’s Technical Advisory Service receives calls about from members. They are common since these codes can be triggered by a vast amount of different causes, some obvious and cheap to fix, and others rare and expensive. Both codes are generic, which means they will appear on any vehicle complying with the OBD-II standards. This article provides an overview of some common themes and diagnostic steps to narrow down the causes, which will apply to many vehicles and engine types.
The Basics
P0171 System Too Lean Bank 1
P0174 System Too Lean Bank 2
Many vehicles have more than one O2 sensor; these codes relate to the sensor before the catalytic converter. Bank 1 is used as a naming standard, even if there is only one bank. If the engine is in a ‘V’ configuration, Bank 1 is the side with No.1 cylinder, and Bank 2 is the side without No.1 cylinder. Exceptions are some inline six-cylinder engines that split their cylinders into banks, so the front three are Bank 1, and the rear three are Bank 2 (e.g. some BMW and Lexus engines). Both codes are very similar, as they indicate that the ECU or PCM has detected a lean condition (e.g. excessive oxygen in the exhaust which usually means there is not enough fuel to consume the oxygen) via the oxygen sensor.
For an engine to run efficiently, the air/ fuel ratio needs to be maintained as close to 14.7:1 as possible. The computer uses the signal from the O2 sensor to adjust the mixtures for the best ratio for the changing load condition of the engine. These adjustments can be seen within the live data on a compatible diagnostic tool and are called fuel trims. See Diagram 1
Fuel Trims
There are two types of fuel trims which can be seen in the Parameter IDs (PID) on the diagnostic tool. Short-Term Fuel Trim (STFT) and Long-Term Fuel Trim (LTFT).
Both STFT and LTFT are commonly measured as a percentage of change to the injector pulse width (some manufacturers may use other, more complicated ways of displaying fuel trims). Ideally, they should be as close to zero as possible, which indicates that no adjustments are required. Fuel trims can be adjusted in the positive (more fuel) or negative (less fuel) direction as needed.
STFT refers to immediate changes in air/ fuel ratio occurring several times per second and shows what the engine is doing right now depending on engine load, speed, temperature and other operating conditions. These percentages can change rapidly and within 10 per cent positive or negative, which is OK.
LTFT refers to a pre-programmed air/fuel ratio map in the ECU/PCM’s permanent memory (See Diagram 2). This map has various parameters which allow for changes in the mixture to compensate for the wear of engine components (e.g. rings and valves) or changes of driving conditions (e.g. different driving style or altitude). When the STFT reaches the limit of its adjustment, the ECU/ PCM will consult its map and adjust the LTFT up or down percentage points to maintain the correct air/fuel ratio.
If the O2 sensors indicate LEAN, the computer adds fuel and generates a POSITIVE fuel trim value.
The percentages can vary significantly from different manufacturers as to what
Diagram 1 – Fuel trim information on a diagnostic tool
is out of specification which will cause the ECU/PCM to set DTC P0171, P0174 or both. Some may be if the STFT and LTFT are more than about positive 12 per cent, the engine is running lean, others the LTFT must get up around positive 20 to 25 per cent to log a code. Some Toyotas seem to be about 35 per cent. Just remember the O2 sensor is only reading what is coming out of the engine and there are lots of things to check before condemning the O2 sensor. It might take a few drive cycles to set a code depending on the vehicle.
Software updates
When the fuel trim maps are first made, they were a prediction of what might work as the engine and components wear. These tolerances have been known to be relaxed by manufacturers over time. So, if a vehicle has a persistently recurring code, check for software updates to avoid wasting diagnostic time.
Symptoms
If there is a severe problem and the engine runs lean, these are some of the symptoms.
Hard to start
Rough idle or hunting
Loss of power
Misfire
If there are two banks, the fuel trims should be the same on each side. If they are different, this will help diagnose the fault. If there is only one code for one bank, this means the problem is local to that bank (e.g. vacuum or exhaust leak, bad injector etc.). If you have both P0171 and P0174, this indicates something is impacting both sides (e.g. fuel supply, MAF sensor, vacuum leak etc.).
It is unlikely both O2 sensors have failed at the same time. If there are misfire codes for an individual cylinder, this is also helpful.
Unfortunately, in some cases, the vehicle might run fine, and the only thing that indicates a problem is the check engine light coming on, a code in the memory and the fuel trims out of specification. The code can be cleared and fuel trims reset, however, the code may return when specific operating conditions are in place. This is where some methodical diagnosis will come into play.
Vacuum Leaks
One of the most common issues which trigger these codes is unmetered air entering the engine which the control systems cannot measure. This means there is more air than fuel, so the O2 sensor sends a lean signal. There are any number of possible areas to leak. See Diagram 4 Vacuum hoses that have come off or have split (check the hose to the MAP sensor first).
Air intake pipe from the air filter to the throttle body could be split. PCV valves (a common problem in Holden 1.4-litre turbo, and various VAG engines), loose oil filler caps or dipstick O-rings missing. Evaporation purge solenoids stuck open (V6 Commodores VE and VF). See Tech Talk page 4612 Faulty brake boosters/ vacuum hose and fittings.
EGR valves stuck open from mechanical failure or carbon build up. Use a diagnostic tool to actuate the valve and if the engine changes operation, remove and clean the EGR valve and seat. This may be most noticeable at idle.
ECU controlled solenoids commonly apply vacuum to the diaphragm. This means the leak is only there when the solenoid is energised.
Variable intake system manifolds. Worn shafts or leaking diaphragms (BMW Dual Resonance Intake System (DISA) diaphragms).
Finding vacuum leaks can be difficult. With the engine running, listen for hissing sounds while wiggling the vacuum hoses (use a stethoscope with the end removed to listen into tight places). Next, spray soapy water around the gasket and sealing areas. The soapy water will temporarily seal the vacuum leak, and the engine speed will increase until it is all sucked in (this is a safer way of conducting this test instead of spraying flammable products). If you are still having trouble, use an automotive smoke machine. Smoke machines use a slight positive pressure to quickly highlight leaks. Some vacuum leaks may only occur under certain driving conditions. If the
Split or loose intake tubes and vacuum hoses are a common cause of these fault codes.
Diagram 2 – Fuel trim map
Diagram 3 – Diaphragm faults
Diagram 4 – Possible vacuum leaks
Poorly refitted dip sticks can be a simple cause of these fault codes.
engine has a variable intake system in the intake manifold, the seals and shafts can wear, which can cause vacuum leaks, but only when activated (possibly at high rpm or loads). It is a good practice to check the vacuum diaphragms by applying vacuum to them; they must hold a vacuum. Then actuate the valves or flaps in the manifolds (diagnostic tool might be required if they are electrically actuated) to see if the STFT changes. If you can, as the engine idles give the shafts a poke or a wiggle and see if the engine rpm changes. See Diagram 3
Mechanical Checks
You should also check the engine for good mechanical condition. Use a vacuum gauge to check the manifold vacuum, check the engine for compression, cylinder leak down and valve timing. The engine might be worn out or clogged full of carbon. See Tech Talk page 1289
MAF Sensors
These are becoming a tricky issue as the modern hot wire, and hot film MAF sensor can reduce their performance and send incorrect signals to the ECU, without triggering an appropriate DTC which make them hard to diagnose. They can become dirty or contaminated over time from engine fumes or particles from the air filter. Another way a MAF sensor can be contaminated is from silicone. Silicone is used to protect the sensors electronics, and it has been known to leak out over the sensing thermistor. Both problems can slow the MAF response times and cause underreporting of engine air flow. So, the ECU does not add enough fuel, which results in a lean signal from the O2 sensor.
To check the MAF sensor, use a diagnostic tool to monitor the STFT. At idle, they may be within plus or minus 10 per cent which is OK, but, as the engine speed increases, they will begin to go positive. With the engine stopped, it is possible to spray some commercial MAF cleaner into the ports of MAF sensor which may clean off some of the contamination. Then recheck the STFT. If they don’t improve, the MAF may not be the problem. If they do improve, this might be the culprit. It is recommended to fit a new MAF sensor, as cleaning them is not a reliable longterm repair method. See Diagram 5 Ensure no modified air filter assemblies are fitted and that the screen in front of the sensor is installed, as this is designed to smooth out the airflow, so the sensor can get an accurate reading. See Diagram 6
Exhaust Leak Upstream of the O2 Sensor
Some think this is unlikely. However, depending on the engine and manifold design, the exhaust system can have positive and negative pressure during the engine cycle. If there is a leak, this may cause fresh air to enter the exhaust, and the O2 sensor will send a lean signal. Look for black soot around the exhaust manifolds, which might indicate a crack or failed gasket. Get a colleague to block the tailpipe with a rag while the engine idles and listen for exhaust leaks. See Diagram 7 Some modern engines have reinstated Secondary Air Injections Systems into the exhaust manifolds. Ensure there are no faults or leaks in these systems. See Tech Talk page 4511
Check for leaking feed pipes to EGR
valves. Has there been a modified exhaust fitted? If so, check the O2 sensor is fitted correctly and wiring for damage.
Fuel Delivery Faults
It is easy to check the fuel pressure with a diagnostic tool via the fuel pressure sensor on most direct injection systems and compare that to the specifications (see Tech Online). However, it is good practice to check the fuel pressure with a known good master gauge to ensure the specification matches the readings, but checking the pressure in the shop at idle and with the revs up may provide a false impression that the fuel system is OK.
The engine could be running lean due to a lack of fuel volume under load, causing the engine to lean out and set the codes. This could be caused by a worn fuel pump or dirty fuel injectors. These codes may only be triggered when the customer is towing a trailer or similar high load situation, which makes the cause hard to diagnose. Some things to check are:
• Low voltage supply to the fuel pump.
• Bad earth for the fuel pump. Dirty or partially blocked injectors which cannot provide the flow rate under load.
Partially blocked fuel filters. Inline or on the pickup in the tank.
Crushed, kinked or internally failed fuel lines.
Dented or deformed fuel tanks that are blocking the pickup
Aerated fuel, bubbles from air being sucked in. Low fuel level (does the owner only put $5 of fuel in at a time?). Cavitating fuel pump?
Cleaning the hot wire/film in MAF sensors may improve the fuel trims. It is recommended to replace the sensor for a reliable repair.
This screen is designed to smooth out the air flow through the sensor so it can read accurately.
Diagram 5 – MAF sensor contamination
Diagram 6 – MAF sensor screen
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Faulty fuel pressure regulators.
Worn fuel pump which can provide pressure, but not volume.
Manufacturers may not give a specification on fuel volume, but a rule of thumb is at least 750ml to one litre in 30 seconds for a good pump. If there is no fuel volume gauge, use an amp clamp and an oscilloscope to measure the amperage waveform, which is a fast way to assess the fuel pumps condition. See Tech Talk page 4732
O2 Sensors
When these codes are displayed, the O2 sensor is usually the first thing to be replaced. You might get lucky as the O2 sensors can fail, become contaminated by coolant or silicone or they become slow with age. In many cases, there will be other codes for these issues. Check their operation first before replacing them. See Diagram 8
There are two main types of O2 sensors which have different output signals. Ensure you know what type you are dealing with before you test them. See Tech Talk page 4333
Conclusion
Once the fault is found and repaired, you must reset the fuel trims with a diagnostic tool. Then carry out any idle relearns or drive cycles to get the fuel trims back to the correct value. Otherwise, you may have a different set of symptoms. See Tech Talk page 4658
This article is not a comprehensive list of all the possible cause of these codes, but if you check for the faults above you should be able to locate the issue through a process of elimination without unnecessarily replacing parts.
Diagram 8 – O2 sensors
There are two main O2 sensor designs (wide and narrow band), which will output different signals. Ensure you know which one you are trying to test.
Send feedback on any common faults you have found, or what has been a successful diagnostic method for you, and I will produce a follow-up article. Email: techtalk@vacc.com.au
For the specification and component testing procedures suggested in this article, check in the ‘Engine Management’ module in Tech Online within VACC MotorTech, or call the VACC Technical Advisory Service.
Diagram 7 – Exhaust leaks
An exhaust leak upstream of the O2 sensors can cause them to send a lean signal.
The easy-to-use diagnostic tool comes softwareenabled, providing auto-detection, top-range health reports, monthly updates and more.
Seamlessly integrates with VACC MotorTech, saving time diagnosing many technical issues.
Flexible payment plans, available in-house with no interest or fees.
OurAuto Diagnostic Tool
For all your automotive stationery and
The OurAuto iStore is the one-stop automotive shop for everything you need to run your business with over 100 products, divided into various categories including workshop, motor-car traders, business management, OHS, safety wear, clothing, technical publications, promotional and
Becoming a VACC or TACC member opens up a wide range of special offers and discounted products and services for you and your business. VACC and TACC have collaborated with organisations which provide essential services to your business to offer special low rates for members. Couple the savings from discounted products and services with the subsidised services which VACC itself offers to members, and your annual membership can easily pay for itself. Everything from IR advice, to cheaper EFTPOS terminals to technical solutions is on offer. This guide gives you an idea of the offers which you can access, as well as a number of other collaborations.
Workplace/IR Advice
Members can access services including a call centre for employment-related questions, a web page with award rates and policy and employment fact sheets, writing of employment contracts, handbooks and policies, and member and industry representation.
03 9829 1123 ir@vacc.com.au vacc.com.au
Auto Apprenticeships
VACC takes the hassle out of hiring trainees and apprentices, as businesses are matched with high quality candidates who meet strict selection criteria. VACC also looks after all administration aspects of the apprenticeship, including visits by Field Officers.
VACC MotorTech brings together VACC’s Tech Online, Times Guide, Tech Estimate, Technical Advisory Service and Tech Talk products with Haynes’ international know-how, to provide an enormous amount of technical service and repair information to subscribers.
nib has a mission and vision of people enjoying better health. VACC and TACC members (including their staff) receive a corporate discount on nib’s retail health insurance products.
1800 13 14 63
OurAuto iStore
Businesses can purchase a wide range of items, including personalised stationery, consumables such as floor mats and seat covers, workplace safety signage and much more. Member businesses automatically receive a discount on purchases.
03 9829 1152 ourautoistore.com.au
Website Services
OurAuto Digital provides a one-stop solution for your business’ website, including a custom design, rendering for smartphones and tablets, email accounts and hosting. Businesses are able to update web content themselves. VACC and TACC members receive these services at a discounted rate.
1300 687 288 ourautodigital.com.au
Eiffel Lubricants
A market leader in lubricants, and distributes a range of effective and safe automotive products for maintenance and care of all types of vehicles.
03 9394 1079 eiffellubricants.com.au
Fine Tuning Automotive Mental Health (FTAMH)
Funded by the WorkSafe WorkWell Mental Health Improvement Fund, VACC has developed FTAMH. The program provides free information, resources and practical measures to help automotive business owners identify and prevent mental health issues in the workplace.
finetune.vacc.com.au
EFTPOS Facility
Commonwealth Bank could provide the expertise, insights, technology and financial solutions to help your business move forward. Our Commonwealth Bank Business Banking Specialists can guide you through available business solutions to suit your business needs.
1300 013 341 vacc.com.au
Training & Education
Members can access automotive industryspecific training programs in business management, industrial relations/human resource management, technical and OHS & Environment. Skills Development Centre also facilitates short courses, online programs and diploma and degree qualifications. 03 9829 1130 info@vaccsdc.com.au vaccsdc.com.au
Freight Services
VACC and TACC members receive discounted rates and benefits, including trace and track capabilities, one number to call, one easy-to-understand invoice, and online job quoting, booking and tracking. Contact VACC for an application form.
03 9829 1152 vacc.com.au
OurAuto Diagnostic Tool
Easy-to-use diagnostic tool with class leading automotive fault technology, including seamless integration with VACC MotorTech, providing auto-detection, top range health reports and monthly updates. The Diagnostic Tool is available on a convenient monthly subscription plan.
1300 687 288 ourautoscantool.com.au
AutoCareers
The AutoCareers jobs portal connects jobseekers with employers wanting skills and labour. VACC and TACC member businesses can advertise qualified and apprenticeship vacancies free of charge.
03 9829 1133
autoadvice@vacc.com.au autocareers.com.au
Environmental Advice
VACC members can benefit from environmental compliance advice, briefings, training and on-site assessments. Green Stamp is an accreditation program that recognises and promotes businesses which have implemented sound environmental practices.
Spirit Super is a multi-industry super fund with over 321,000 members and $26 billion in funds under management. We work hard for members through low fees, excellent service, and a focus on competitive investment returns.
1800 005 166 spiritsuper.com.au
Zembl
Zembl is the leading energy price comparison service for Australian businesses. VACC and TACC members have access to a free energy bill review. Then Zembl works with leading retailers to find a competitive deal.
1300 915 162
https://zembl-dev.webflow.io/ partner/vacc
VACC Accreditation
VACC Accreditation is here to help drive your business forward. Achieving accreditation means a business can demonstrate it is meeting a higher standard that is valued by customers.
03 9829 1167
accreditation@vacc.com.au vacc.com.au
OH&S Services
Members can access consultation and advice on OHS issues, including incident management, policies, workers’ compensation and more. OHS specialists provide workplace assessments and training, and administer the HazCheck management system.
03 9829 1138 ohs@vacc.com.au vacc.com.au
Officeworks
Officeworks is here to support VACC and TACC members with over 40,000 products, business services and specialist advice. Members can sign up for an Officeworks 30 Day Business Account, and enjoy exclusive business pricing and flexible delivery options. officeworks.com.au/campaigns/vacc
Sixfam
Sixfam is an experienced Telecommunications Service Provider, built on the basis to help ease the frustrations of small to medium businesses in Australia.
03 9200 2800 sixfam.com.au
Apprentice Helpline
VACC Helpline provides apprentices and businesses a free automotive apprenticeship sign-up and advisory service to assist all parties at any time. With years of experience and knowledge, it’s well worth a quick phone call to put you in the right direction.
03 9829 1133
autoadvice@vacc.com.au | vacc.com.au
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Partner with VACC and TACC, connect with 5,000 members. Call
Auto Workplace Assist
A convenient go-to solution for supporting automotive workplace compliance needs. Health and Safety can be a complex, high risk and costly area for workplaces. AWA offers readymade, industry-specific compliance products, so that business owners can get on with the job at hand.
1300 585 136 autoworkplaceassist.com.au
TACC
Founded in 1930, TACC serves the automotive industry in Tasmania and amalgamated with VACC in 1999. TACC members gain access to all of the same products and services as VACC members, however TACC also has a number of additional services for its membership.
03 6278 1611 | tacc.com.au
Insurance
Automotive business owners can access competitive solutions through OurAuto Insurance. Specifically designed to meet to the unique risk profile of the automotive industry, OurAuto Insurance can help your business access the best cover at an affordable rate.
1300 441 474 contact@ourautoinsurance.com.au
Graphic Design
VACC’S Marketing department can assist members with their graphic design requirements at a subsidised rate. Services include business cards, logo re-designs, corporate image overhauls, brochures and advertisements.
03 9829 1189 creativeservices@vacc.com.au
Workplace Update
All VACC and TACC members receive Workplace Update on a monthly basis via email, with issues also available on the VACC website. The publication provides the latest news and information regarding workplace and industrial relations, OHS and environment, business obligations and training opportunities.
03 9829 1123 vacc.com.au
Advertising
Members receive Australasian Automotive magazine as a member benefit and have access to preferential advertising rates. The VACC marketing department can help members by designing advertisements at a heavily subsidised rate.
John Eaton 0407 344 433 jeaton@ourauto.com.au
Tech Talk
Included in VACC/TACC membership is a subscription to the Tech Talk publication, the premier technical publication of the VACC Technical Services Department since 1986. The journal is printed 11 times a year, while a backcatalogue of articles is available as part of the Tech Online website.
03 9829 1292 vacc.com.au
Test and Tagging
ETCS offers TACC members electrical service statewide, including installation, testing and tagging and assisting with OHS requirements. TACC members can access special member rates.
1300 724 001 | etcs.com.au
TACC Apprenticeships
TACC takes the hassle out of hiring trainees and apprentices, as businesses are matched with high quality candidates who meet strict selection criteria. TACC also looks after all administration aspects of the apprenticeship, including visits by Field Officers.
03 6278 1611 | tacc.com.au
Roadside Help
TACC members who want to reward their loyal customers can do so though TACC’s Roadside Help program. Members purchase vouchers to give to customers, which customers can use for free help for a flat battery, tyre change, fuel or a tow back to the member’s business.
03 6278 1611 tacc.com.au
TACC Accreditation
TACC Accredited Repairers are promoted to the community as a group of professional businesses who deliver high quality repairs and services. Participating members enter into a contract with TACC to deliver a more professional level of service. TACC promotes these members.
03 6278 1611 tacc.com.au
Liability and customer vehicle risks
• Damage due to faulty workmanship
• Negligence by contractor/ subcontractor
• Driving risks
• Authorised vehicle inspections
Management risks
• Breaches in employment
• Unfair or wrongful dismissal
• Harassment or discrimination
• Wrongful acts as an owner/director
• Statutory fines & penalties e.g. OH&S breaches
Property risks
• Business interruption
• Fire & storm
• Machinery breakdown
• Theft & money
• Glass
Cyber risk
• Data breaches
• Cyber attacks
• Contingent business interruption
With over 20-plus years of experience, OurAuto Insurance is proud to be trusted by automotive businesses across Australia.
Contact us today to arrange a hassle-free insurance quote for your business.
