The AADA has today released a new report, ‘New Vehicle Efficiency Standard Impact on Automotive Dealers’. Prepared by the Centre for International Economics, this report comprehensively examines how the New Vehicle Efficiency Standard (NVES) could affect Australia’s more than 3,200 franchised new car dealerships.
The key finding of the report was that the introduction of the NVES could cost Australian dealerships anywhere between $1.1 billion and $2.1 billion between 2025 and 2029, depending on how car manufacturers (OEMs) and vehicle importers decide to meet their emissions targets.
There are several options OEMs have in meeting their compliance obligations. Namely, adjusting their vehicle mix to meet their specified fleet target, purchasing credits from other OEMs to offset any emissions above their fleet target, or paying a penalty for not meeting the target.
In practice, most regulated entities are expected to use a mix of these strategies to meet their NVES obligations, and the approach taken by OEMs to meet the NVES and how costs are shared across stakeholders, will affect the impact on dealers.
The findings of this report are critical in supporting ongoing advocacy for the franchised new car industry, particularly regarding increasing franchising protections for dealers and the importance of shifting the point at which compliance is met with the standard to the point of sale.
The AADA continues to advocate that while dealers are ready to contribute to emission reduction goals; it’s important that OEMs can’t shift risks and financial costs downstream to dealers due to the extensive power they wield in their relationships. Implementation of the NVES should reflect the realities of the automotive retailing industry in Australia, and the compliance burden should lie squarely with the regulated OEM.