25th May, 2015 · Policy Viewpoint

Proposed Import Law Changes Shake
Industry

4 minutes to read

In this article

What Australians pay, compared with similar overseas right-hand drive markets:

Notes: 1. Prices are Manufacturer’s List Price and includes GST applicable to the base/standard specification model but does not include dealer delivery and various government charges (e.g.

Senator, the Hon Kim Carr Acknowledges AADA Concerns

Senator for Victoria, the Hon Kim Carr recently responded to a letter from AADA CEO Patrick Tessier which outlined the Association’s concerns surrounding the impact of relaxing private new car importation laws.

Consumers will unlikely benefit from changes to new car import rules, and local operations will be hurt, says an increasing number of voices from Australia’s auto industry.

Michael Deed, Policy Director - AADA, Terry Keating, Deputy Chair - AADA and Patrick Tessier, CEO - AADA discuss imports with Senator Kim Carr at the FCAI Annual Dinner. Photo: Donna Ellis.
Michael Deed, Policy Director – AADA, Terry Keating, Deputy Chair – AADA and Patrick Tessier, CEO – AADA discuss imports with Senator Kim Carr at the FCAI Annual Dinner. Photo: Donna Ellis.

The Federal Government is proposing amendments to new car import rules which would give consumers the ability to import new cars into the country outside of established frameworks; an issue which has been comprehensively covered in the pages of Automotive Dealer.

The AADA’s stance is firm: relaxing new car import laws is not only unnecessary, but potentially dangerous to the consumers it is supposed to benefit.

Our voice however, is just one amongst a myriad of others from across the auto industry, many of which are uncovering the pitfalls of this proposed scheme.

The decision to relax new car importation laws is set to go to cabinet ahead of a decision later this year and according to Federal Assistant Minister for Infrastructure, Jamie Briggs ‘any potential changes… will be focussed on ensuring consumers have access to the lowest cost, safety and youngest car fleet possible.’

But don’t consumers already have access to this in Australia? And will new import rules actually benefit the consumer at all?

These questions were tackled head-on in a detailed investigation which recently appeared in the Sydney Morning Herald titled What Drives New Car Prices.

The story, which examines the import issue from a number of angles, highlights that the Government’s plan is flawed since ‘most European car makers will not sell new individual vehicles to the public, meaning prospective users of the scheme would need to go through a secondary channel that could bring safety and insurance repercussions.’

The bottom line is that when compared with equivalent models sold in markets such as Japan and the UK, Australia’s new cars are competitively priced and often better value as evidenced in the table below. This new car affordability data is referred to as one of the many ‘inconvenient truths’ often ignored by industry skeptics.

What’s more, a comparison of popular nameplates from today (compared with their forefathers from over 20 years ago) further demonstrates just how competitive and generously equipped new cars are in Australia today.

One aspect of the new car pricing system that does push up prices (and quite ironically as pointed out in the SMH article) is the way cars are taxed.

Even if importation laws are relaxed and consumers are able to bring new cars into the country themselves, they will be subject to the same range of taxes included on cars sold through the Dealer network.

This includes GST, the import tariff (on cars from selected countries) and the Luxury Car Tax (LCT) which Automotive Dealer readers will be well aware of.

All these taxes would still be payable on cars imported independently, along with substantial shipping fees estimated to be in their thousands per vehicle, more than what manufacturers (who ship in bulk), pay.

What Australians pay, compared with similar overseas right-hand drive markets:

Notes: 1. Prices are Manufacturer's List Price and includes GST applicable to the base/standard specification model but does not include dealer delivery and various government charges (e.g. registration fees, stamp duty, CTP and the like) normally included in a 'driveaway' price. Any LCT applicable is shown in the notes column. 2. For conversion purposes we have used the average daily exchange rate during the 1st half of 2014 from the Reserve Bank of Australia, Exchange Rate Data [https://www.rba.gov.au/statistics/hist-exchange-rates/index.html]—$1 to £0.55 GBP. 3. Price in the UK if a model with the same level of specification as Australian variant was available. Where a model with this level of specification is not available, these prices are based on estimates from the brand.
Notes: 1. Prices are Manufacturer’s List Price and includes GST applicable to the base/standard specification model but does not include dealer delivery and various government charges (e.g. registration fees, stamp duty, CTP and the like) normally included in a ‘driveaway’ price. Any LCT applicable is shown in the notes column.
2. For conversion purposes we have used the average daily exchange rate during the 1st half of 2014 from the Reserve Bank of Australia, Exchange Rate Data [https://www.rba.gov.au/statistics/hist-exchange-rates/index.html]—$1 to £0.55 GBP.
3. Price in the UK if a model with the same level of specification as Australian variant was available. Where a model with this level of specification is not available, these prices are based on estimates from the brand.
The combination of these factors seems to negate any perceived savings to the privately-importing consumer, notwithstanding the potential safety issues raised by many industry players.

‘You buy a car from a Dealer in Australia and the consumer protection is incredibly robust. But buy a vehicle from overseas, and there’s every risk that it’s stolen, under finance or it’s two cars welded together as one. It’s a huge issue’ says David McCarthy – Mercedes-Benz Australia corporate communications manager.

This is echoed by Porsche Australia spokesman, Paul Ellis:

‘If [the deregulation plan] is allowed to go ahead it will bring into the country cars with questionable ownership history and questionable servicing history… it will also jeopardise resale values of existing cars that meet stringent quality standards put in place for new vehicle sales in Australia’ Mr Ellis said.

Another factor that weighs into the debate includes the modifications made to overseas vehicles so that they’re able to cope with Australian conditions.

Many manufacturers tweak the cars they import into Australia to cope with hotter climates, coarser roads and Australian-specific motoring preferences. Vehicles intended to be driven in Europe, Asia etc. that are brought directly into the country will likely underperform compared to their Oz-spec equivalents.

AADA agrees that in all retail industries, Australian consumers deserve a fair deal and prices. However, the lowest price does not always mean the greatest value – and considering the range of drawbacks consumers could likely face if import laws are relaxed, deregulation does not seem like the greatest option.

David McCarthy puts it well: ‘Of course we want to protect our business. But our business is also protecting our customers.’

Considering the uncertainty surrounding the price of importing mainstream cars (adding taxes and shipping fees), the question remains:  Will consumers really be better off?

Senator, the Hon Kim Carr Acknowledges AADA Concerns

Senator for Victoria, the Hon Kim Carr recently responded to a letter from AADA CEO Patrick Tessier which outlined the Association’s concerns surrounding the impact of relaxing private new car importation laws.

In his response, Carr states how ‘Labor is concerned that the Government has ignored the warnings of experienced Dealers that safety and service standards cannot be guaranteed in direct personal imports of cars.’

He also highlights the complexities of purchasing a car and that sub-standard products cannot simply be returned: ‘Buying a car is not like buying a book on Amazon,’ Mr Carr says, ‘once the car arrives the consumer can hardly return it if it is faulty and there will be none of the support traditionally provided by car dealerships in Australia.’

Carr says that Labor will closely monitor the Government decision regarding this issue and assures that it ‘will not support any change in the law that allows potentially sub-standard vehicles to flood the market.’