Luxury car buyers will be the big winners if import rules change | comment

Federal Government is meeting with all sides of the car industry on Monday to consider radical changes to the Motor Vehicle Standards Act, in the belief that reform will lead to cheaper cars for the masses.

Changes are needed in many key areas but let's hope the bureaucrats get the balance right, because the ramifications will be far reaching – perhaps beyond the government's expectations.

If the government is not careful, the changes could reverse Australia's 90-year low in the road toll – and clog our courts with cases trying to discover the true identity of a stolen car, or with people suing someone for selling them a lemon.

That said, there is room to make changes that would benefit enthusiasts and the wider community, and hopefully address the government's concern about vehicle prices, particularly at the top end of the scale.

The prices of mass-market vehicles are already at 20-year lows and affordability is at a 38-year high.

You only need to look at the price of a Toyota Corolla to see it's true: the starting price of $19,990 is the same today as it was 20 years ago. And yet today's car is loaded with features that were exclusive to limousines back then.

With all this in mind, and having trolled through many of the 200 submissions made online, here is my unofficial submission to the review into the Motor Vehicle Standards Act.

– Contrary to popular belief, removing the import restrictions on new and used cars will not lead to cheaper vehicles for the mass market.

– Most cars priced below the current Luxury Car Tax threshold ($61,884) are slightly cheaper than their equivalent vehicles in the UK and the USA once the correct taxes and other charges (not clearly identified on foreign websites) are calculated on the foreign vehicles, and the same equipment is added.

– See here for examples

Car prices may go up if the Australian dollar weakens significantly

– Trying to trace the owners of privately imported cars that require a recall will create a new layer of bureaucracy. Otherwise, the cars could become a road safety risk if they can't be quickly and easily identified and fixed.

– Car prices may go up if the Australian dollar weakens significantly, but private buyers would be at a disadvantage because they don't buy hedge funds in advance at bulk rates, as car makers do.

– There is scope to apply significant pressure on luxury car prices. Once prices start to climb above, say, $100,000 a gap starts to develop between local and overseas prices.

– Even when equipment differences and Australia's Luxury Car Tax are taken into account, Australians do in most cases pay more for cars priced above the $100,000 mark.

– Allowing private buyers to import brand new vehicles has the potential to contaminate the local market with vehicles that appear to be the same as those sold locally but which are cheaper because they lack certain equipment. This has the potential to wipe thousands off the value of luxury cars bought in Australia, leaving people "upside down" on their finance payout figure, or out of pocket when it comes time to sell.

– If the government does allow people to privately import cars priced above $100,000 then it needs to ensure, at the very least, all safety equipment matches that fitted as standard to vehicles imported by manufacturers in Australia. For example, a Mercedes sedan in the UK comes with seven airbags while nine are standard in Australia. Anyone who eventually buys a privately imported new car as a secondhand vehicle should not have to guess what safety equipment it comes with.

– There is a way to put price pressure on luxury cars without allowing private buyers to import their own new vehicles, or cut Luxury Car Tax.

– In North America and Brazil and other countries, dealers and the industry provide – and the media publishes – the average transaction price for every model (as listed by VFACTS), on a monthly basis.

– This means buyers can check online or in specialist publications what average price is paid for a particular car. In North America it is also compulsory for car makers to reveal the rebate (or "incentive") on every vehicle each month (the money paid from the car manufacturer to the dealer to help sell a particular model). This also gives consumers a large clue as to which companies are desperate to move particular models and where the best deals are.

– See examples here.

– Australian authorities should also consider making it compulsory to advertise the price of cars with metallic paint. At present, most prices appear next to photos of white cars, with metallic paint in the fineprint (adding up to $550 on a $13,990 car). Often there is only one or two non-metallic colours from which to choose. If metallic paint accounts for the biggest choice, then it should be the most visible price.

– More than 80 per cent of passenger cars sold in Australia come with automatic transmission. And yet, particularly in the small-car class, the advertised prices are for manual models. Automatic transmission models can add up to $2500 on budget-priced cars. Given automatic is the more popular choice, it is this price that should be the most prominent, with a note in the fineprint that buyers of manual models get a discount of up to $2500.

– Consumers and car enthusiasts in Australia should continue to be able to get access to certain specialist imported used cars.

– But the current arrangements are overdue for review and, following widespread complaints to state-based Fair Trading departments, there needs to be stricter checks on the original kilometres the imported vehicle has travelled before it arrives in Australia, and on its bonafides to ensure it is not a stolen car with a new, false identity, or has been made from parts sourced from written-off-and-then-repaired vehicles. (Australian authorities have recently closed this loophole, it shouldn't be re-opened).

– Used car imports should continue to be restricted to specialist vehicles that were not sold in Australia by the manufacturer as new (examples include the Nissan Cube small car and Nissan ElGrand people mover and others).

– For example, an unwary buyer should not be caught out buying a diesel Toyota Corolla that was never sold in Australia, but has ended up on the used market after it was privately imported.

– There needs to be clearer point-of-sale warnings on imported used cars, and more prominent vehicle identifiers (both on the vehicle and on roads and traffic authority computer systems) to ensure ordinary car buyers are not caught out buying a car that will be more costly to service, more difficult to source parts for, and more expensive to insure (largely driven by parts restrictions, according to the submissions from the insurance industry).

– Removing restrictions from the imported used vehicle market could have a significant impact on consumers. As it stands, it is extremely difficult for police and insurers to uncover the true identity of stolen, rebirthed or illegitimately repaired cars that were originally sold as new in Australia.

– Trying to trace the true identity of an imported used car that may be stolen and given a new false identity, or rebuilt from two or more written-off cars (a process now outlawed in Australia) would be next to impossible and exposes the ordinary consumer to too great a risk of buying an unsafe vehicle, or one that could be repossessed if found to be stolen, leaving the buyer out of pocket and, potentially, with a loan for a car that's been confiscated.

– Any imported used car found to have a tampered speedometer, or is proved to be stolen, or been built from parts from a previously written-off car, should be scrapped or returned to its country of origin at the expense of the importer. Just as is the case in New Zealand.

– With the exception of classic vehicles (1960s and older), the age of specialist used car imports should be restricted to cars three-to-five years old from their date of manufacture. At present, much older and less safe cars are eligible.

Significantly improved car safety is one of the silent contributors to Australia recording its lowest road toll in 90 years (in 2013)

– There is a strong argument to lower the age of imported specialist used cars. Removal of restrictions on imported used cars in New Zealand initially brought the average age of vehicles there down. But it has since gone the other way, and the average age of cars on New Zealand roads is increasing.

– Significantly improved car safety is one of the silent contributors to Australia recording its lowest road toll in 90 years (in 2013).

– Reducing the age of specialist used vehicle imports will assist in reducing the age of Australia's overall car fleet, which is still higher than other developed countries, despite our recent new-car sales records.