The federal government today advanced its position on relaxing restrictions on the personal importation of new vehicles — that is, buying a new car from dealers overseas if they will sell you one.
In an announcement from the office of assistant minister for infrastructure Jamie Briggs, the government outlined its plan for what it called “getting on with delivering safer roads and better vehicles for motorists as part of our detailed review of the Motor Vehicle Standards Act (MVSA)”.
The government says it needs to enact further public consultation. It will also need to pass said proposals through an upper house that has knocked back a number of its recent budgetary proposals.
The crux is that a more open market will allow people to hunt for sharper prices. It might also give Australians access to vehicles not sold in Australia through official channels, so long as they comply with the Australian Design Rules (ADR) that the government intends to relax.
"As part of the review more broadly, the Australian Government will continue to cut unnecessary red tape by accelerating the harmonisation of our vehicle standards with international best practice to ensure we lower costs for business and make Australia more competitive," the government's statement said today.
Today's announcement has drawn the ire of domestic factory importers such as Mercedes-Benz Australia, as well as a “bewildered” Australian automotive peak body, the FCAI, which is furious about what it labels a “simplistic” and “misguided” move.
Simply put, both the FCAI and other industry sources contend that imported lower-end (mainstream) cars will be little or no cheaper at the lower end than the same model imported and sold through existing channels.
One could potentially draw the assertion that this proposed relaxation of the law, then, has the potential to benefit buyers of premium vehicles the most (which generally are relatively pricier here) as well as those keen on something left-of-centre not sold here, such as a Japanese kei car, perhaps? (Provided it meets ADR).
But even so, Australia's biggest premium car seller Mercedes-Benz argues that even the cost of premium cars imported here would be little cheaper — if at all — by the time they had drawn the luxury car tax and the vehicle had passed through the various steep importation and transport charges.
“Star Trek is not real,” said Mercedes-Benz Australia corporate communications senior manager David McCarthy. “You can't just turn the transporter on and send it to Australia. It needs to be shipped, insured, go through a customs process…”
It is also unclear what protections would be offered to anyone who buys a new car from overseas should they not get what they ordered, and if an overseas dealer under its franchise agreement would be allowed to knowingly sell a car for export in the first place.
They would also potentially lack other consumer protections such as comparable warranty coverage.
The government says that, after “consulting broadly” for the past 12 months, it is mooting a serious deregulation of the current structure surrounding the importation of new vehicles - the aim being to “strike the balance between appropriate safety standards, in line with international best practice, and consumer access to vehicles at the lowest possible cost”.
“As part of this process the personal importation of new cars has been a key consideration, particularly given the end of light vehicle manufacturing in Australia in 2017-18,” the government said.
“Cabinet has now agreed to consider possible options to reduce restrictions on the personal importation of new vehicles after further public consultation is undertaken,” it added, claiming that the focus would be on securing the “lowest cost, safest and youngest car fleet possible”.
Speaking with the ABC today, Minister Briggs outlined the government’s position.
“The real issue here is: why regulate if you're now part of a global regime?” he told the government-funded national broadcaster.
“We allow people to purchase all sorts of goods from overseas on the internet. There seems no reason why we shouldn't allow people to buy new cars from overseas markets if there's an opportunity to do so.”
“That would obviously be a right-hand-drive vehicle — we're a right-hand-drive country — and it would ensure that you are meeting the same standards you would if you bought the car in Australia," he added.
This stance would seemingly preclude someone from importing a basic-level new vehicle from a developing market such as India, where a vehicle may not meet Australian Design Rules.
In response to the proposals, the Federal Chamber of Automotive Industries (FCAI) — the car industry’s peak body — came out all guns blazing by calling the potential move “misguided”, and slammed what it called the government’s “complete disregard” for the consequences.
“Currently, consumers are offered the highest possible level of consumer protection when it comes to purchasing a new motor vehicle through an Australian dealership,” said chief executive Tony Weber. It appears that a number of dealer jobs could be endangered under the proposal.
“Brands selling in this country make substantial investments in Australia by way of dealerships, workshops, technology and training to support and service their products. This means consumers can be certain their vehicles can be serviced and repaired appropriately, and that recalls are captured so consumers are informed if something needs to be fixed.”
“This system is also underpinned by Australian Consumer Law.
“The industry is not ‘fearmongering’ when it says Australians who personally import a vehicle made for another country may end up with a vehicle that does not meet their needs or operate as required in Australian driving conditions.
"Vehicles made for the Australian market are engineered for Australian conditions and safety specifications, so they will cope with the Australian climate, roads and lifestyle.
"It is very simplistic and misguided to say there is no reason to regulate if you're now part of a global regime. Only 57 countries are part of the global regime.”
The FCAI cites various examples to back up its take on the matter.
Vehicles made for sale in Australia in some cases have specific engine and transmission cooling systems to cope with Australia’s climate, towing requirements and fuel quality. Items such as sat-nav, air-conditioning and infotainment systems are also calibrated for this market.
“The cars may look the same on the outside, but there are differences when you lift the bonnet or look deeper into the interconnected systems,” Weber said.
“In addition, it is important to note that motor vehicle brands selling in Australia manage the complex logistical process to get a consumer’s vehicle from the factory to their driveway.
“This includes managing the entire border control process, which includes everything from getting the car off the ship, through quarantine and to the consumer safely. How can a single consumer be expected to navigate this system confidently without the addition of significant bureaucratic red-tape - which the government has said time and time again it is determined to reduce?”
In today’s announcement, the government said that the MVSA imposes $281 million a year in regulatory compliance costs to Australian business, and that “we are confident these costs can be reduced substantially”. This is the red tape referred to, in part.
“I am bewildered that Assistant Infrastructure Minister Jamie Briggs can take such a simplistic view of an issue and appear to completely discount the advice of the industry it directly affects,” Weber went on to say.
“It seems this position is driven by a misinformed view of the purchasing of a motor vehicle. The reality is that the whole of life cost of a vehicle under this scenario will become a significant burden for those who choose to import vehicles from overseas dealers, made for another country’s conditions.”
The FCAI added finally that there has been what it considers “misinformation” about the cost of new cars in Australia.
“Our analysis of this matter has confirmed that Australia has one of the most competitive right-hand-drive markets in the world and this is reflected in the price of new cars in this country," it said.
"When we look at cars with the same level of specification, we find that the majority of cars made for Australian conditions are competitively priced in Australia compared to Japan, the UK or New Zealand,” it said.
One must pose the obvious question of exactly what the cost savings would be in importing a vehicle from, say, the UK or Japan.
Australia is already perhaps the world’s most competitive car market, and a like-for-like comparison of mainstream vehicle costs (that is, spec-for-spec) between right-hand drive markets such as our and the UK shows less difference than many assert, at least at the lower end of the market.
Premium cars sometimes cost relatively more here, though at least some of this is due to the customarily higher standard specification offered here, and the luxury car Ttax (of course, there are margins too).
Chief spokesman for Mercedes-Benz, McCarthy said the company had made its opposition to this clear.
(Naturally, we would add before we quote McCarthy, it is in the interests of Mercedes-Benz Australia to oppose something that has the potential to take away sales from its network, but the concerns go deeper than that and — in his words — are reflected by much of the industry as a whole.)
“Mercedes-Benz and the industry have made our position very clear in submissions to the commission enquiry, statements and submissions to the minister,” McCarthy said.
“There is certainly no guarantee that the consumer will enjoy the same level of protection that they currently do.”
McCarthy also said that “there is zero daylight between our position and the industry position on consumer protection. There is a robust system that exists in Australia and has for decades. We accept that, back that and are part of that”.
McCarthy also questioned “if there is going to be a different regime that applies to privately imported cars?”
“The minister acknowledges that by saying ‘buyer beware’ and he acknowledges that only some section of the market will benefit, and that there is no guarantee that prices will be cheaper,” McCarthy said, adding you would also have a different — or non-existent — warranty.
Meantime, government addressed the other side of the coin — parallel imports — saying it was “not inclined to take the same approach with used vehicles”.
So-called ‘grey’ imports of used vehicles, or parallel imports, make up a large proportion of New Zealand’s ‘dumping ground’ market. Concerns rage over the safety of these vehicles in certain circles.
“We are, however, considering how we can continue to support specialist and enthusiast vehicles to be imported without impacting on road safety,” the government added. Good news for fans of classic American muscle cars, then.