With the momentous recent news of the end of Australian vehicle manufacturing as we know it, the Federal Government has now asked the Productivity Commission to review import regulations on cars, and preliminary recommendations of the Commission suggest that allowing commercial scale imports of secondhand vehicles from other countries, currently dubbed ‘grey imports’, will substantially benefit the consumer.
The Commission points to the experience in New Zealand, which removed import tariffs on secondhand car imports in 1987 and saw the affordability of secondhand vehicles increase, which also put pressure on new vehicle importers to keep their new cars competitively priced. The Commission sees a current lack of competitive pressure in the secondhand market in Australia as allowing overseas car manufacturers to keep their new car prices high.
According to the current rules set out in the Motor Vehicle Standards Act, you can only import one used vehicle from overseas at a time, plus the Motor Vehicle Standards Regulations prevent automotive workshops from importing more than a hundred vehicles in any twelve month period.
Opposition to any relaxation of current import rules generally centres on safety concerns, namely, is it possible to make sure that individual cars are safe if there is any large influx of secondhand cars into Australia? Whereas vehicle history checks within Australia are now straightforward and standard practice, checking the validity of odometer readings and other car history checks may be much more difficult with imported secondhand cars.
In terms of these safety concerns, the Productivity Commission cites a survey by the Accident Research Centre at Monash University in 2005, which found that there was hardly any difference in crash safety between cars of the same year of manufacture where one group had been sold new in Australia and another group had been grey imports.
Opponents to the Productivity Commission’s proposals, as well as opposing the idea on safety grounds, point to the fact that new car prices in Australia are at historic twenty year lows and that the market is effectively one of the most competitive in the world, with sixty-five brands present, a third more than in Europe and the US.
The Commission acknowledges that any changes should proceed with caution, and that safety and environmental standards that apply to new cars sold in Australia should also apply to any secondhand imports.
We’ll keep you posted on the progress of the Productivity Commission’s recommendations.