Anyone who sees Steve McQueen jump that barbed wire fence in the Great Escape understands that for some, owning a motorcycle is like a Sirens Call.  Despite the mystique, operating a motorcycle dealership involves more work than the movies suggest. All motorcycle dealers have certain legal considerations of which they need to be aware. This article details those legal obligations and what they mean for the way motorcycle dealers do business.

Motorcycle Dealing in Australia

In Australia, motorcycle dealing is a regulated industry. Governments regulate industries in general to ensure that the market is characterised by fair competition and integrity as well as having adequate protections and safeguards for consumers.

State and territory governments regulate motorcycle dealers. As such, the legislation and attendant regulations that specifically affect your dealership depend on where you operate your dealership. For example, the Motor Dealers and Repairers Act 2013 (NSW) and Motor Dealers and Repairers Regulations 2014 (NSW) govern dealerships in NSW.  You must become familiar with the legislation in force in your state or territory.

The most important legal considerations you need to be aware of are:

A motorcycle dealership cannot operate unless and until their state or territory government has granted it a license to do so.

Again, what that licence enables you to do will depend on your state or territory legislation. However, in general, it will allow you to run a business that involves selling, buying or exchanging motor vehicles (in your case, motorcycles) including by wholesale. Be aware that dealing with used motor vehicles or auto-dismantling and part-reconstructing vehicles requires you to apply for a different type of licence.  The definition of a motor vehicle typically includes cars, motorcycles, caravans and trailers.

When you apply, you will need to show that you meet certain criteria. For example, in NSW an applicant must be over 18 and be a fit and proper person. They cannot be bankrupt, and their proposed dealership needs local government approval. Also, an applicant will not be given a licence if the government has previously disqualified them from holding one or been found guilty of stealing a motor vehicle within the previous ten years. You also have to show that you have sufficient financial resources to carry on your business. There is a fee attached, and if you receive a licence, you will likely need to display it on your business premises.

Safety

Deaths on Australian roads are a major public concern. As riders of motorcycles make up a considerable portion of those deaths, motorcycle related issues have become a focus for governments. Safety is a particular concern when your dealership sells a motorcycle to a novice. All state and territory regulations dictate those models that dealerships can and cannot sell to beginners.

Typically, these models are moderately powered with an engine capacity of not more than 660 cubic centimetres. Their power-to-weight ratio cannot exceed 150 kilowatts per tonne. Of course, you still cannot sell some models to novices even though they meet these requirements because they are regularly involved in accidents. You must be aware and stay aware of the list of approved motorbikes for novices. Every state or territory body has the list accessible on their website. You will need risk management procedures in your business to prevent staff selling unsuitable motorcycles to novices as well as regular educational updates of staff concerning the models on the list. Be aware that there are penalties for selling motorcycles that are not on the list.

Consumer and Motorcylists

As a business, you must observe all your obligations under the Australian Consumer Law (ACL). You must be able to meet all the consumer guarantees and provide any appropriate remedies.

As well your obligations under the ACL, you will likely also be required to honour other state or territory guarantees specific to motorcycles. For example, in NSW there exists the ‘dealer guarantee’. If a consumer has a complaint, they can pursue their claim under the ACL, the dealer guarantee or the manufacturer’s warranty. As a dealer, you must make good any defective motorcycles that you sell. The guarantee extends to subsequent purchasers of the motorcycle within a limitation period. The period for a new motorcycle driven under 7000km before purchase is limited to either:

  • 10,000km after purchase; or
  • Six months after purchase less one month for every 2000 km driven before purchase (whichever comes first).

Key Takeaways

Motorcycle dealers need to be aware of their obligations for licensing, safety regulations and consumer law.  You should also take note of dealer guarantees where applicable. If you need tailored advice, speak with an experienced lawyer. Contact LegalVision’s qualified lawyers to assist you. Questions? Call us on 1300 544 755.

Carole Hemingway

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