An open dialogue between the AADA and the Australian Federal Government has put the Association in a valuable position to address debates around ‘parallel’ and used imports.
Dealers are being bombarded with unnerving news and speculation about the future of both new and used cars in Australia, with talks of new ‘parallel’ imports as well as large-scale used cars potentially flooding our shores.
Whilst Dealer uncertainty at this transitional time is understandable, the new AADA is being recognised as the official peak body representing car dealers in Australia, which should come as welcome news for Dealers. Indeed, the Government has not only demonstrated impressive receptiveness towards the AADA, but has approached the Association for discussion on these critical matters – and we are being heard.
In the matter of importing used cars into Australia, the Productivity Commission has recommended that the Australian Government ‘progressively relax the restriction on the importation of second-hand passenger and light commercial vehicles’ into Australia.
The Report titled Australia’s Automotive Manufacturing Industry suggests that the new laws do not commence before 2018 and apply (initially, at least) to vehicles manufactured no earlier than five years prior to the application date for importation. Along with this, the Report recommends that the $12,000 imported second-hand vehicle duty be removed from the Customs Tariff.
Whilst AADA disagrees with some of the Commission’s recommendations, it’s important to note that targeting and vilifying the Productivity Commission findings will not only weaken our credibility, but achieve nothing in the way of reaching our goals.
Instead, the AADA is focused on continuing discussions with key Parliament members to express our concerns and put forward credible suggestions. Already, members of the AADA board have had lengthy discussions with a number of Government Ministers and their senior advisors about allowing large-scale importation of other country’s used cars.
The response from a letter released by the AADA to all members of Parliament about the risks of grey imports, has also been very encouraging.
Whilst the Abbott Government has not yet said officially whether it will embrace or reject the recommendation, comments from Ian Macfarlane, the Federal Minister for Industry, are encouraging.
‘The Government has no intention of allowing Australia to become the dumping ground for other countries’ old second hand vehicles’
According to a formal response from the Federal Government, the issue will instead be ‘thoroughly considered’ within a review of Motor Vehicle Standards Act 1989 – which is expected to take place commencing this month.
The results of this Review will also influence the Government’s decision on allowing consumers to purchase new cars from overseas.
The harmonising of Australian Design Rules (ADRs), by shifting to adopt international design standards, will open the door to a direct comparison of prices and Dealers will be able to ensure the prices paid to manufacturers are no longer distorted by unique Australian rules, which add cost. There is no longer a need to protect a local manufacturing industry.
AADA is confident that prices in Australia, in most cases, are less than other right hand drive markets when adjusted for content and differences in tax rates. We have the most competitive market in the world and as a consequence the best prices. Critics who continue to push the myth that car prices will drop dramatically are incorrect.
Assistant Infrastructure Minister, The Hon Jamie Briggs MP has indicated the Government’s ambitions to remove restrictions.
‘Why shouldn’t consumers have the option to do that if there is no good safety reason?’ Mr Briggs said.
Dealers nervous about the implications of such a decision, should take heed that this inevitable change will not spell the end of the business model they’re accustomed to. In cases where there is a major difference in price between vehicles sold here and overseas, manufacturers will have to adjust to the changed rules.
Mainstream car models sold in Australia are amongst the most competitive and cheapest in the world compared with other right hand drive markets. Consumers who expect that shopping for a car online will be as easy as a click of a button, will soon learn that it’s not a simple exercise. The substantial monetary investment that is required to purchase a new car will mean most consumers prefer to visit the physical dealership premises and the onus will be on manufacturers to adjust prices to ensure they remain competitive.
‘The root of the misconception is consumers believe Dealers make all the money on new cars sold and that by going to an overseas supplier they will improve the transaction price, but this is simply not true’ said AADA Chairman Ian Field.
Other Dealers have raised concerns that non-dealers will have the freedom to import new cars in bulk with the view of selling them privately. AADA will make submissions to the Government suggesting that it is not in the public’s interest to allow this to happen.
The review of the Motor Vehicle Standards Act 1989 will give Dealers a chance, in a series of public hearings, to put forward their views to Government about new and used imports in Australia. Assistant Infrastructure Minister, The Hon Jamie Briggs MP will be responsible for the review.
In the meantime, the AADA will continue to provide consultancy on these matters to the Government where required.
There are 19 million used cars in Australia and we do not need any more.
AADA’s submission to the Productivity Commission in February can be found at www.aada.asn.au