Mazda Australia managing director Martin Benders says the notion that new cars are universally sold cheaper elsewhere is “rubbish”, and that a proposal to open up the market to late-model used imports would have a dire affect on the new vehicle market as a whole.
Benders refuted the notion that Australians could or even would use a back door to get into a near-new European or Japanese model at a fraction of the price of one sold through official channels. Instead, we would see a flood of unsafe and thirsty aged Japanese models, just like New Zealand, he said.
Firstly, according to Benders, there is little demand for new-ish European or Japanese grey imports, and the cost-benefit to Australians even if there was would be negligible. Furthermore, flooding the market with such vehicles would depreciate the value of used cars across the board.
At present, importation of used vehicles is directly restricted and have been since the early 1990s, while prior to that import quotas, tariffs and shipping costs, as well as a lack of suitable right-hand drive models, acted as an effective limiter. Stakeholders are now calling for change.
CarAdvice spoke to Benders, the chief of Australia’s biggest full-line vehicle importer, last week, prompted by the release of last month’s final report from the Productivity Commission — an advisory body to the federal government without legislator powers — that recommended new rules for so-called grey imports could be implemented from 2018.
The proposed rules, which would subvert the current system that cracks down harder on the importation of used vehicles not sold in Australia as new, would initially be limited to vehicles manufactured no earlier than five years prior to the date of application for importation.
Furthermore, these vehicles would be limited to second-hand vehicles imported from countries that have vehicle design standards consistent with those recognised by Australia — in other words, places with decent safety standards such as the UK and Japan.
In the wake of the release of these recommendations, federal industry minister Ian MacFarlane said Australia would “not become the dumping ground for other countries’ old second-hand vehicles,” but did not rule out deregulation full-stop. That said, Benders said MacFarlane "gets it", and was confident the PC's recommendation would not be enacted.
This sentiment was echoed last week by assistant infrastructure minister Jamie Briggs, who told The Australian the New Zealand experience had been "horrific". Interestingly, the Coalition has since called for the new vehicle market to be relaxed to allow cars to be purchased from overseas.
Even were the PC’s idea to be adopted, it wouldn’t slide in the real world, according to Benders, who opined that the only viable business involving used imports — in other words, the only one both cost-effective and in demand — is the importation of aged Japanese models with sub-par safety and environmental technology.
Other business opportunities, says Benders, are “red herrings”. The documented dominance of 8-10 year-old vehicles such as these in NZ, rather than two-year old BMWs from the UK, for instance, stands as real-world evidence supporting the assertion.
“If they open it up to used cars there is only one source of bulk used cars, and that is 8-9 year old cars out of Japan where they export a million a year,” Benders told us.
“They are past their economic life, they are old in terms of fuel economy, they are old in terms of safety technology and the people who want to import these cars will go for the volume card, and it’s the only source, so thats what will happen.
“Even in NZ where its totally open, the number of cars that are less than five years is [infinitesimal], and the number of cars that comes out of UK are hardly visible on grass. The near-only supply of cars in NZ are Japanese, and they’re 8-9 years old.”
We asked Benders if he thought some cannier entrepreneurs might see fit to imports circa-2012 German luxury car out of the UK for instance. His response? There was not adequate demand, and even if there was the cost benefits would be minimal.
“There will be some of those but they’ll be irrelevant,” he said.
“[Take] the people who are buying the latest top of the range E-Class or S-Class. ‘Oh sir you can save yourself some money and get yourself a two year old one,’ the average person is going to say ‘I’m not interested.’
“The people trying to save money on lower incomes aren’t going to buy one [a late-model luxury car]. You’ve got to think about who these people are. People buying those expensive cars are buying them because they want the latest and greatest, not a two-year old one.
“These people who’d bring these cars in are aimed at the volume end, where the money is, and it’s the mass market. When they come in, we have a very saturated car market, the same as the US and Western Europe, and you squeeze 100k or 200k used cars on there, all the used car values will drop, depreciation.
“It’s a pretty simple economic formula.
“Everybody is getting tied up in these ‘oh we’re getting ripped off’ [ideas]. A Mazda 3 in Australia is $6k less than the UK Mazda 3 and three grand less than a NZ Mazda 3, so forget this rubbish about cars are cheaper elsewhere.
“They may be cheaper in the US, but sorry, the steering wheel is on the other side and there are totally different market forces at play. The US doesn’t allow imports of used cars, Western Europe doesn’t allow, so why would we in Australia?”
Benders’ comments largely echo those made to this reporter by Holden chairman Gerry Dorizas last month, who said a wholesale relaxation of grey import restrictions could slash the new vehicle market in two.
The Mazda chief's comments on Australian pricing also echo an FCAI report released early last month.