Parallel imports minefield

The Federal Government’s decision to allow the private importation of new-near cars has huge potential negative ramifications for the local industry, AADA believes.

The Government announced planned changes to the Motor Vehicle Standards Act 1989 in early February, claiming it would “give more choice for car buyers and save industry over $70 million a year in lower regulatory compliance costs”.

The law will be changed so that, from 2018, a consumer will be able to personally import a new car or motorcycle from another country with comparable standards to Australia, up to once every two years, if specified conditions are met.

The vehicle must be a motorcycle or right-hand drive passenger vehicle, be no more than 12 months old and have no more than 500km on the odometer.

The Australian Government will specify the countries considered to have comparable standards. Of the world’s right-hand drive countries, Japan and the United Kingdom currently meet the standard. Other countries may be included upon reaching a comparable standard.

Former AADA Chairman, Ian Field, said the change of heart opens up potential minefields for Australian Dealers and consumers.

“In Australia, it is part of the Franchise Agreement that a Dealer must personally deliver the vehicle to the customer. You can’t just put it on a truck and send it to them; you have to personally deliver it to explain the systems and make sure the customer is familiar with their responsibilities as well as the Dealer’s responsibilities, and explain the warranty procedure. It’s part of the process,” he said.

“If our systems are compatible with the vehicle on-board computer systems, we will be able to service them, but they are not necessarily spec-ed exactly the same. They have different communication systems for different markets and we won’t necessarily have the communication technology to communicate with the car and be able to service it easily. I know of one instance where a guy bought a car in South-East Asia and no matter what they did, they just couldn’t fix it. It was really a compatibility issue with the on-board computers. They actually sent him to Malaysia to get fixed!

The manufacturers understand it’s not just the sales process; it’s the sales and support process, for the life of the vehicle. These are not consumer durables that get thrown away. They last for a long time, they are highly technical and they require competent people to maintain them. But they also require educated drivers who know what it is they’re supposed to be doing. If there is no process, if we’re going to cut out that process completely and they’re just going to have them delivered to the wharfs in Australia, what we’re saying is, ‘good luck!’”

Mr Field said the media was making a big deal of customers being able to bypass Australian Dealers, but in reality the new policy would just send business to overseas Dealers.

“Where do they think they’re going to buy them from? The factory’s not going to supply them. Factories supply them to their Dealer body; they don’t sell them to the public. If this is about the Tesla model, that somehow the factories are going to start delivering them anywhere in the world, that’s not going to happen.

This is the point politicians miss: if it’s that easy and cars are that much cheaper, do they think the Dealers aren’t going to do it? If that’s what it’s all about – letting us go and buy them – well I don’t want to, because I won’t have the support that I need to look after my customers.”

“It’s not just selling the vehicle; it’s all of the stuff that comes with the lifetime ownership, and at the end of the ownership period – I can tell you this as a Dealer – the resale value of a car that is not compliant to Australian specifications – in other words, a vehicle that does not have an Australian compliance plate – is something we just don’t want to know. We do not buy them. My company’s policy is we do not buy cars without an Australian compliance plate. So I don’t know where they’re going to sell them. Maybe they can sell them back to the English Dealer they bought them from.”

Mr Field said consumers would be vulnerable under the new policy.

“A lot of these cars will be bought online, sight unseen. What happens if the car arrives and it’s not quite right?” he said.

“How will taxes like LCT be applied to these cars? Will GST be applied to them? Is someone going to make sure that the emission control system is actually working?

“When we argue this way the Government assumes it’s self-interest. The trouble is the people who own the Ferrari will go to the Australian Ferrari Dealer and say, ‘what are you going to do about it?’, and what we’re saying is, we don’t know what to do with these vehicles. We don’t want to be embarrassed or have the customers who buy these products being embarrassed. We tried to tell the Government that this is fraught with issues and will cause enormous consumer issues – for us, because of bad policy.”

In attempting to improve choice for consumers, the Government had opened a can of worms and slapped Dealers in the face, Mr Field said.

“Dealers are a community of business people who employ 68,000 people in Australia and are the largest skills training provider in the automotive sector. Between them, Dealers have $17 billion-worth of facilities around the country. We make a significant investment in the country in terms of employment and training, and the Government seems to want to bypass that and, instead, support Dealerships in London and Tokyo. They are clearly undermining the value of the contribution Dealers make,” he said.

“The government makes a lot of money from the Australian auto industry. Why would it want to divert some of that income to other countries’ governments?

“They’ve made the decision on the philosophical view that somehow cars will be cheaper. The industry disputes that, but we do believe it will create lots of problems for consumers that Dealers will be asked to rectify. And we’re not able to do that, for these reasons.”

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