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Green light for parallel import cars – a tale of two stories?

With the Federal Government announcing on Tuesday that it will allow parallel vehicles to be imported from 2018, it would seem the news is largely exciting for motorists on the face of things. But will it all be one way traffic?

First, it’s important to note these changes need to pass through parliament later this year and would only commence once local manufacturing ceases in 2017 – whether that jeopardises the recent efforts of Guido Dumarey to salvage the Holden Elizabeth manufacturing plant remain to be seen.

The legislation would allow car (and bike) enthusiasts to directly import right-hand drive models from the UK and Japan that are either new or near-new, in which case the vehicle must be less than 12 months old and with less than 500km on the clock – such imports would be allowed once every two years.

Japan is one of two locations from where consumers would be able to import cars – are prices likely to be cheaper though?

Japan is one location from where consumers would be able to import cars – are prices likely to be cheaper though?

Predictably, automotive manufacturers and local dealers have made their frustrations clear, quizzical about why the government would allow customers to circumvent legislation designed to benefit them through warranty and against recalls – also citing concerns around the impact on jobs, car specifications, durability, and lifetime costs. At first, some of these concerns would seem partly valid – for example, as cars age and transfer between users, inevitably they will require parts that aren’t available locally and may be expensive or difficult to source – which could in turn compromise the maintenance standards of said vehicles.

With recalls, such as the one affecting cars equipped with Takata airbags, consumers will be left in the dark to find out about their problem, yet alone solve it. On warranty matters, who or where does a customer turn to? What about cars built to specifications that are vastly different from Australia’s testing climate? The luxury car tax will still apply, so wouldn’t it be better to do away with that instead?

Pursuing this line of logic, we fail to address consumers’ rights to shop around for their vehicle (let’s not forget, Australia’s car market is often an afterthought to manufacturers), and in doing so be afforded the opportunity to buy unique cars or save money. Of course, once taxation and shipping are included, your ‘mainstream’ car probably won’t be cheaper – it is also doubtful local prices (or jobs) will decline, as uptake is not expected to create sufficient pressure – however, those in ‘luxury’ or ‘hobby’ segments stand to benefit, and they’re the ones most interested in keeping their vehicle to the highest standards – thus maintenance concerns are overblown.

Luxury cars are those who stand to lose the most from any change to the legislation concerning parallel imports

Luxury cars are those who stand to lose the most from any change to the parallel imports

Regarding consumer protection, the government has indicated some degree of risk on the part of the consumer but it is not without looking into solutions, suggesting: car inspections before being released onto roads; an online database requiring all imports be detailed to facilitate recalls; insurance companies would be able to provide warranty insurances.

What one must consider, is that amongst those affected by the changes, there are many car enthusiasts who already import cars not available locally – not a whole lot is likely to change in the way of consumer protection for that segment. For other segments, with Australian consumer law for ‘lemon’ cars being relatively weak (remember the ‘Destroy my Jeep’ campaign?), such concerns by auto manufacturers would be better directed at improving local protection.

While debate will continue, it is clear there is still a lot of fine-tuning required before the changes can become practical to the everyday customer. Whether that means the age of eligible cars is extended to pressure local prices, or luxury car taxes are reviewed, the important point is that we’re now talking about the issue.

3 comments

  1. Rick says:

    It should reduce Prestige New Car prices.
    e.g. a Mercedes C-Class is US$35,000, whereas its A$70,000
    With only a 30 % Exchange rate difference the max price should be about A$47,000 on road.

    Do the math on a $150,000 AMG and it starts to add up that the New car dealer/importer is gouging the public.

    February 29th, 2016 at 2:18 pm

  2. Alan Saunders says:

    You make some valid points in regard for parallel imports and those fears and concerns were rampant in New Zealand when Japanese imports first came on the scene.
    Franchise holders shunned the the needs of parts for imports which created a niche market for entrepreneurial individuals who set up shop to meet those needs.
    Dealerships soon realized that they were denying themselves a additional profit by ignoring the significant and growing needs of the spare parts market.
    The truth is that many replacement parts for parallel import vehicles are identical to the local cars and simply need the parts department to cross reference and make a sale.
    Dealerships in NZ quickly saw the error of their ways, changed their attitude to imports and wised-up on parts interchangeability and stocking non-local spares.
    Australian dealerships would be foolish to fall into the same attitude and response. They should be right now grasping the future by personnel training and identify additional opportunities to meet and satisfy a new market opportunity.
    If they don’t someone else will be the cat that licks the cream.

    February 29th, 2016 at 3:22 pm

  3. Scott Manning says:

    Parallel imports -bring me on! About time the smug marketeers in some euro companies faced global competition. In my case, the VW T6 comfortline model line up (or more precisely the lack thereof!) with the T5 Aussie customers got some choice in engine size and 2wd or AWD. Now there is none. Yet, in euro land, customers can build to order many combinations. This change will hopefully force veewee Oz HQ to take customer choice seriously or face global rationalisation- as they add little value, why pay for that local overhead if customers bypass it. There are great new business opportunities here and fat local HQs need to make customers happy if they want to keep their jobs.

    February 29th, 2016 at 10:02 pm