Rethinking competition in automotive retail

Key points

• Australia’s merger reforms need to reflect how consumers buy cars today, not how they bought them in the past. 
• Automotive competition is now national, digital and brand-led, not simply local dealership-based. 
• Scale in automotive retail can benefit consumers through stronger digital capability, EV readiness and service infrastructure. 
• Effective merger assessment should protect consumers while recognising the realities of a fast-changing, highly competitive market. 

Australia’s new mandatory merger control regime has arrived at a time when the automotive retail market is changing faster than many traditional competition frameworks can comfortably accommodate.

The policy intent behind the reforms is clear. Competitive markets matter. They support consumer choice, innovation and economic confidence. However, the key issue for automotive retail is whether merger assessments are being conducted on the basis of how consumers bought cars in the past, or how they buy cars today.

Historically, dealership competition was largely viewed through a local geographic lens. Consumers visited nearby showrooms, compared a limited number of options and often relied heavily on information provided by individual dealers. That market has fundamentally changed.

Today’s buyers can compare prices online, obtain quotes from multiple dealers, search inventory nationally, purchase interstate and arrange delivery without ever visiting a traditional showroom. Generative AI is accelerating this shift further, helping consumers compare specifications, pricing, reviews, reliability issues and servicing options before they contact a dealer.

This has important implications for the Australian Competition and Consumer Commission’s assessment of automotive transactions. A dealer’s closest competitor may no longer be located in the same suburb. It may be in another city, another state or even a different brand altogether.

The proposed Peter Warren Automotive Holdings acquisition of Wakeling Automotive is an early example of the practical issues emerging under the new regime. The transaction progressed to a Phase 2 review (and subsequently withdrawn), extending timelines and creating uncertainty for buyers, sellers, employees, manufacturers and investors. More broadly, it highlights the need for regulators to carefully consider how automotive markets are defined, how online competition is assessed and how consumer benefits from scale are recognised.

Scale is often treated cautiously in competition analysis, but in automotive retail it can produce clear consumer benefits. Larger dealer groups are often better placed to invest in digital platforms, electric vehicle capability, service infrastructure, technician training, cybersecurity, inventory systems and improved customer experience. These investments can support sharper pricing, better stock availability, faster response times and stronger aftersales support.

Australia is arguably the most competitive automotive market in the world, with more than 80 brands competing for a relatively small market of around 1.2 million new vehicle sales. This level of brand competition places significant pressure on dealers, regardless of ownership structure. Consumers are not simply choosing between dealerships. They are choosing between brands, products, price points, finance offers, service experiences and ownership models.

Comparable jurisdictions including the United States, Canada, New Zealand and the United Kingdom increasingly recognise that merger analysis must reflect actual consumer behaviour, digital search activity, switching patterns and broader competitive constraints. Australia has an opportunity to do the same without weakening competition policy.

The central objective should remain protecting Australian consumers. The challenge is ensuring the framework used to protect them reflects the market they now participate in: transparent, digital, brand-rich, price-sensitive and increasingly national.