Regional car dealers are pulling the plug on established brands, leaving owners stuck

New car brands claiming sales from established names could see regional showrooms shut their doors – and force many owners to travel long distances for official servicing – a top industry group has warned.

The Australian Automotive Dealer Association (AADA), which represents the nearly 4000 car and truck retailers across the country, says there is now an "unprecedented number of vehicle brands" in a market that isn't growing at the same rate.

It means each brand will hold a smaller slice of the market, which places pressure on regional dealers that do not sell as many cars as those in metro areas – and may struggle to keep their doors open with established brands.

"Regional dealerships often face additional challenges because they serve smaller populations and have less opportunity to offset declining new vehicle sales with higher volumes," the AADA told Drive.

"Rising operating costs, increasing regulatory requirements and significant investment obligations from manufacturers can also make it harder for some businesses to remain viable."

While customers in major coastal cities are presented with a multitude of options for alternative showrooms if one closes, Australians in rural areas face the prospect of a much longer distance to keep their car maintained by the manufacturer – or any warranty support.

On average, Toyota sells 857 cars per dealer each year, and Mazda sells 617, according to the AADA, but it is just 315 for Mitsubishi, 256 for Isuzu Ute, and 202 for Nissan.

In Alice Springs, the joint dealership for Mitsubishi, Kia and KGM (formerly Ssangyong) recently closed its doors, fewer than 24 months after new owners took over.

The consequences are especially severe for Mitsubishi owners seeking to retain the full 10-year/200,000km warranty, which is extended from the base five years/100,000km when all scheduled services are completed at a dealer.

It means owners will need to travel to another Mitsubishi franchise – as far away as Darwin or Adelaide – to retain the extended warranty.

Alice Springs is located approximately 1500 kilometres from Adelaide and Darwin by road – or around 15 hours of continuous driving, or nearly the same distance as travelling from Melbourne to Brisbane.

A Mitsubishi Motors Australia spokesperson told Drive the company contacted impacted owners following the closure of its Alice Springs dealership, but confirmed they must stay within the brand's own network to remain eligible for the longer warranty.

"[Mitsubishi Motors Australia] has reached out to impacted owners via eDM (electronic direct mail) advising them of their options, and the location of their nearest Mitsubishi dealer," the spokesperson said.

"At this stage, the customers will still need to present their vehicle to an authorised Mitsubishi dealer for servicing, to maintain their Diamond Advantage [10-year warranty] program.

"We also advise impacted customers there are grace period allocations within the terms and conditions of Diamond Advantage Extended Warranty and Capped Price Service to assist with their planning."

Elsewhere, a Volkswagen dealership – which covers more than 100,000 residents on the Victoria-NSW border, and surrounding areas – has blamed the Federal Government for its imminent closure.

The Volkswagen dealership, located in Wodonga, Victoria, has announced it will close its doors on 31 August 2026, after 25 years of operation and representing "Australia's first standalone Volkswagen dealership".

In a social media post, Wodonga Prestige Volkswagen blamed "government legislative changes affecting the motor industry that are beyond our control" for its decision to cease selling and servicing Volkswagen vehicles in the Albury-Wodonga region.

It appears to be a reference to the Federal Government’s New Vehicle Efficiency Standard (NVES), which has tracked the CO2 emission value of every new ‘light’ vehicle imported into Australia since 1 July 2025.

Carmakers exceeding the defined CO2 average targets – which are set to be tightened annually until 2029 – will face penalties that some companies have warned will be passed onto new-car buyers as price rises in showrooms.

Volkswagen offers a growing range of plug-in hybrid and electric cars that meet the CO2 targets – along with fuel-efficient three- and four-cylinder turbo-petrol models – but a more likely factor is its decline in sales, down 16.5 per cent so far this year.

Last year, the German car giant reported its lowest Australian sales since 2007, as deliveries of Chinese-made cars surged by 25.9 per cent, in a record market for all new vehicles.

The AADA said the CO2 rules are "influencing the way manufacturers plan their product mix and pricing strategies".

"More broadly, dealerships are managing a combination of increased regulation, intense competition, rising operating costs and significant investment requirements from manufacturers.

"Together, these factors are creating a much more challenging trading environment."

Wodonga Prestige Volkswagen is owned by the Jacob Group of Companies, which also manages the adjacent Toyota and Lexus dealerships.

It has not confirmed if the floor space currently occupied by its Volkswagen franchise will switch to another automotive brand, such as a new Chinese carmaker.

From September 2026, the closest Volkswagen dealerships for residents in the Albury-Wodonga region are between 130 and 175 kilometres away, in Shepparton, Victoria, or Wagga Wagga and Griffith, NSW.

"Dealers regularly review their franchise mix as market conditions change, something that isn't necessarily new to the Chinese brands," the AADA added.

"What has changed is the pace. Australia has seen an extraordinary influx of new brands in recent years, many of them from China, and a number of those brands are experiencing strong sales growth and improving dealer profitability.

"For some dealers, taking on one of these franchises (or replacing a less viable one) appears to them to be a sound commercial decision."

The AADA added the closure of regional dealerships can "reduce convenience" for consumers, because they might need to travel a considerable distance to visit another, compared with those in metro areas.

"Manufacturers have obligations to ensure customers continue to receive warranty and servicing support through their authorised networks or alternative arrangements where necessary. In many cases, another authorised dealer or service agent can continue providing those services.

"That said, dealer closures can reduce convenience for regional consumers, particularly where the nearest authorised service centre is a considerable distance away.

"… It's important that manufacturers carefully consider the long-term sustainability of their dealer networks as they expand or restructure."

According to AADA data, the number of Suzuki and Jeep dealerships has faced the steepest decline in the 12 months between February 2025 and February 2026, with 34 and 25 fewer, respectively.

Renault has also lost 13 dealerships since the start of 2025, the data indicates, along with 11 Jaguar, eight LDV and Land Rover, seven Nissan, six Mercedes-Benz and Peugeot, five Skoda and Fiat, four Volvo, three Maserati, and two Ferrari.

Conversely, BYD's dealer network has expanded by 54, along with 25 extra GWM and 13 extra Chery dealers – plus new Chinese brands arriving in Australia in the last 24 months, including Geely, Omoda Jaecoo, Zeekr, Deepal, Foton and JAC.