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The Australian Automotive Dealer Association (AADA), the peak body representing Australia’s franchised new car Dealers has questioned the need for the NSW Labor Party’s car tax amid new data showing the industry is doing it tough.

Data released today by a Federal Chamber of Automotive Industries shows that sales for new cars is down 8.4 percent year-to-date nationally, while the figure for NSW is a staggering 9.6 percent down year-to-date.

“Car sales are down for the 11th month in a row and given the state of the industry in NSW the last thing it needs is another tax,” said AADA CEO David Blackhall.

“Sales of premium cars have been particularly hard hit in recent months. This tax will further restrict such sales which is a shame as these cars have advanced safety and environmental features which are good for society,” he said.

“Sales of electric vehicles remain very low and this proposed new tax will further discourage the uptake of no emissions cars as it falls on most of the electric vehicles available on the Australian market,” he said.

“We remain concerned about the effect this tax will have on vehicles such as the Toyota Landcruiser, which is not a luxury car and is important to many regional motorists,” he said.

“The point has been made that only two models of Landcruiser are above the proposed thresholds, but this ignores the fact that it is one of the most accessorised vehicles in Australia and the cost of safety and off-road accessories can add thousands to the final price, pushing many vehicles over the threshold,” he said.

“There is already a federal luxury car tax and this is tax on a tax on a tax which is unwarranted and tough on the retail car industry and its customers,” he said.

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The New South Wales Labor Party’s policy to increase car taxes would be a blow to motorists and a struggling car retailing industry.

“This taxation proposal could not come at a worse time for NSW car Dealers who are currently doing it tough,” said AADA CEO David Blackhall.

“New car sales declined by six percent in NSW in 2018, over three times more than any other state in Australia. The industry is struggling due to drought and a tightening credit market and does not need another tax hit,” he said.

“It’s very disappointing that the NSW Labor Party is targeting an industry that employs more than 22,500 people throughout the state, including many in rural and regional electorates, and contributes more than $700 million to the state’s coffers,” he said.

“NSW motorists have made a strong contribution towards a healthy state surplus by paying rego and duties, while also shelling out GST, tolls and fuel taxes. At some stage you have to say enough is enough,” he said.

“This will be sold as a tax on luxury vehicles and it’s been suggested this proposal will target those driving Maseratis. Let’s be very clear, at that price point this tax will fall on a top selling vehicle such as the Toyota Landcruiser. A car which motorists in regional and rural areas would describe as a necessity rather than a luxury”, Mr. Blackhall said.

“This policy will also make most of the electric vehicles available in Australia significantly more expensive, which makes a mockery of any attempts to promote the uptake of electric vehicles,” he said.

“There is already a luxury car tax which is levied by the Federal Government and this duplicate tax will only add to the cost of vehicles with advanced safety and fuel efficiency features,” he said.

“This is of course, a tax on a tax on a tax – triple taxation, since stamp duty compounds on both GST and the Federal luxury car tax. It’s a bad tax, a poor policy choice and completely inappropriate given the worrying signs emerging in the NSW economy.”

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Legislation proposed today requiring retail car Dealers to operate with credit licences should not be rushed as it will likely increase costs for consumers and come as a blow to small, regional car dealerships.

“We understand and respect the Opposition’s desire to implement a range of recommendations from the Banking Royal Commission, but there are serious risks from rushing this legislation through,” said AADA CEO David Blackhall.

“We are still not sure what this policy will mean for the provision of finance at dealerships. The majority of new car Dealers, particularly mid-to-small and regional dealerships, do not have credit licences, and there will be a considerable cost of compliance for many businesses,” he said.

“New car Dealers already comply with consumer credit laws through the finance companies providing the credit services at the dealership. Rushing ahead to implement these changes will result in significant costs falling on smaller dealerships and those costs will ultimately have to be passed onto consumers,” he said.

“It is crucial that any point of sale changes are done through a considered consultation process which brings to together retail dealers, credit providers and government,” he said.

“We are still uncertain why the exemption needs to go. Obtaining finance from a dealership is a cost effective, convenient solution for many consumers.

Furthermore, the Royal Commission heard from ASIC that there were no concerns around the point of sale exemption and the interim report found that delinquencies in the car finance market are very low,” he said.

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The Australian Automotive Dealer Association (AADA), the peak body representing franchised new car Dealers has welcomed the release of the Government’s consultation paper for a mandatory scheme on the sharing of motor vehicle service and repair information.

“The AADA welcomes this consultation paper and looks forward to working with the Government to inform the details of a service and repair information sharing regime,” said AADA CEO David Blackhall.

“Franchised new car Dealers need a strong independent repairer network, because the task of repairing and maintaining the entire vehicle fleet is too big a task for our members alone”, he said.

“It is critical that this regulation provides access to information on a fair, equitable basis and that sensitive information is shared in a responsible way,” Blackhall said.

“The ACCC recommended that car manufacturers share technical information with independent repairers, on commercially fair and reasonable terms and we would expect to receive information on the same basis,” Blackhall said.

“We look forward to participating in the consultation process so that an effective code of conduct is developed, that meets the demands of all repairers, while safeguarding safety, environmental and security information appropriately, as per the ACCC’s recommendation,” he said.

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The Government’s decision to abolish the point of sale exemption for retail dealers providing car finance has come as a surprise to the new car industry.

The Banking Royal Commission handed down its report today recommending the removal of the exemption of retail dealers from the operation of the National Consumer Credit Protection Act (NCCP Act). Simultaneously, the Government issued its reponse to the report and accepted this recommendation.

“I am surprised given the point of sale exemption was only briefly mentioned in the Royal Commission’s interim report and suddenly, its abolition is now Government policy,” said AADA CEO David Blackhall.

“It is unclear what this policy will mean for the provision of finance at dealerships. It is not certain how many new car Dealers already have credit licences, but we do know that many mid-to-small and regional dealerships do not,” he said.

“I appreciate the Government’s commitment to carefully consider how this reform is implemented. The AADA will make ourselves available to work with the Government to ascertain the impact this will have on Dealers and to ensure that the transition is as smooth as possible,” he said.

“Leadership in this area is with the finance providers and we look forward to working with them to ensure that financiers, Dealers and consumers are not disadvantaged during this transition,”he said.

“It is unclear why the exemption needs to go. Obtaining finance from a dealership is a cost effective, convenient solution for many consumers and the Royal Commission by its own admission repeatedly said that delinquencies in the car finance market are very low,” he said.

The Government has also agreed to changes in the sale of add-on insurance products by Dealers, including working towards a deferred sales model and the imposition of a cap on the amount of commission paid to vehicle Dealers.

“The concept of a deferred sales model is already under consideration by ASIC. We will be urging Treasury to adopt a model which defers the sale for around three to four days and allows informed consumers a waiver,” Blackhall said.

“Allowing ASIC to impose a cap on add-on insurance commissions will only formalise a practice already being employed by the main insurance companies,” Blackhall said.

There will also be a review on commissions for general insurance and consumer credit insurance to test whether the exemption to the ban on conflicted remuneration remains justified, which the AADA looks forward to participating in.

 

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The AADA supports the release of the Senate Committee’s report on electric vehicles but is disappointed in evidence suggesting Dealers are not promoting the sale of EVs.

“There are some important recommendations in this report and new car Dealers are looking forward to playing our part in supplying EVs to the Australian market,” said AADA CEO David Blackhall.

“We are supportive of a public education campaign and a coordinated approach to skills and training. We are also supportive of a CO2 standard, and Australia should work towards an achievable standard that does not punish local consumers and businesses,” he said.

“It is also encouraging that the Committee has not recommended a relaxation of used car imports as was suggested by certain groups,” he said.

“However, it is very disappointing that this report has mentioned evidence claiming that car Dealers are not interested in promoting and selling electric vehicles. This assertion, which was repeated by certain groups throughout the inquiry, is completely false,” said AADA CEO David Blackhall.

“To resist selling EVs would reduce profits and put Dealers in breach of their franchising agreements with vehicle manufacturers, potentially risking their businesses,” said David Blackhall.

“In our numerous representations to this committee, we consistently made the point that new car Dealers are technology agnostic and will sell whatever vehicles our customers want,” said David Blackhall.

“Unfortunately, the authors of this report have quoted the Tesla Owners Club and ignored the evidence of Australia’s 1,500 franchised new car Dealers and the 70,000 people they employ,” he said.

“Electric vehicles are part of the future and Dealers are determined to be part of a thriving industry which supplies them to the market – the primary reason that they are not yet selling well is related to supply, cost and range.”

Talking down the efforts of the tens of thousands of dealership employees across Australia will do nothing to accelerate the uptake of EVs.

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