Cars ordered online from overseas will cost more

Car industry slams online car-buying proposal, cars ordered online from overseas will cost more not less, and not covered by warranty.

The Federal Government's proposal to allow new cars to be ordered from overseas online -- making Australia the first country in the world to do so -- would “completely obliterate the new-car market” and may end up costing more than buying locally.

Foreign cars would cost up to $12,000 each to ship and process -- in addition to the purchase price -- be void of any warranty and ineligible for capped price servicing deals, which are subsidised by the local divisions of each car company, the Australian Motor Industry Federation has warned.

“I’m not sure if this is a political stunt, but this announcement is premature and has been done without consultation with the industry,” said Richard Dudley, the chief executive officer of the Australian Motor Industry Federation.

“Why does the Federal Government want to make Australia the first country in the world to do this? If it wants to make cars cheaper, it should scrap the Luxury Car Tax,” said Mr Dudley.

The Luxury Car Tax adds 33 per cent to the cost of every vehicle priced more than $61,884. Intended to slug buyers of BMWs and Mercedes-Benz cars the tax actually hits Toyota customers more than any other brand.

Several car companies contacted by News Corp Australia dismissed the proposal as “madness” but did not want to comment on the record for fear of upsetting the Federal Government.

The chief executive of the Federal Chamber of Automotive Industries Tony Weber says Australia is already the most competitive new-car market in the world, with 66 brands competing for 1.1 million sales annually compared to the US where 53 brands compete for 15.6 million sales annually.

Commsec data shows new-car affordability is at a 38-year high thanks to strong competition, low interest rates and the sustained strength of the strong Australian dollar.

The price of a brand new Toyota Corolla and Nissan Pulsar are the same as they were 20 years ago -- $19,990 plus on-road costs -- even though the cars are significantly safer, better equipped and have more technology.

The prices viewed online in the US appear cheaper but do not include state taxes and GST, which brings them in line with prices in Australia.

“If this proposal were to go ahead, it’s not going to make cars cheaper, we’re already one of the cheapest places on the planet for new cars,” said Mr Dudley.

“The Federal Government clearly doesn’t understand how the business works,” said Mr Dudley. “There is very little (profit) margin on the sale of a new car, it’s made up on service, finance and trade-ins.”

Mr Dudley said “it might be a discussion paper but there has not been enough thought put into this, and there has been no thought given to the negative impact on consumers”.

If the proposal went ahead Mr Dudley predicted there would “mile-long queues outside the courts in every jurisdiction as consumers try to take action against the local distributors who didn’t sell them the car”.

The proposal has spooked all levels of the car industry, with several of the biggest brands warning they would mount nationwide action.

“We will get every dealer in every electorate to lobby their Federal member and warn them of the potential catastrophic impact on local jobs and businesses,” one senior car executive warned.

The Australian Motor Industry Federation says there are 100,000 retail motor trades businesses which employ more than 308,000 people and have a combined annual turnover in excess of $162 billion.

“These businesses are already doing it tough, we’ve seen seven months in a row of new-car sales decline, and now the Federal Government wants to open the floodgates to privately imported new cars,” said Mr Dudley. “The impact on jobs will be profound and dealers will close.”