Commission report says Aussie government should embrace used imports

A long-awaited Productivity Commission report has recommended the government embrace imported used vehicles, allowing the importation of ‘grey imports’ of used passenger and light-commercial vehicles – but not before 2018 “to ensure that reasonable advance notice is given to affected individuals and businesses, such as vehicle leasing companies”.

The Commission made the recommendations as part of a 326-page report, which includes calls to further align Australian Design Rules with other international standards, the end to financial support for manufacturers, and the review of Australia’s luxury car tax.

For imports, the PC noted there was now little reason to block late model imports, and that, on balance, would be of benefit to the Australian public.

“The Commission expects that, in the long term, the progressive relaxation of restrictions on the wide scale importation of second hand passenger and light commercial vehicles would have net benefits for the community as a whole,” says the report.

“Provided relaxing the import restrictions were undertaken within an appropriate regulatory standards and compliance framework, net benefits would arise through lower prices and/or improved product specification (vehicle features) as well as increased product choice and availability for vehicle buyers, including consumers, businesses and government fleet buyers,” it adds.

The Commission has recommended only vehicles up to five years old and those with “consistent” design standards to Australia be given the green-light for importation.

The Commission’s review, which was made public yesterday August 26, recommends a gradual reduction of the restrictions on imported used vehicles after Ford, Holden and Toyota close their factories in 2017.

Under the current guidelines only specialised or enthusiast vehicles over eight years old are able to be imported in limited numbers.

David Vinsen, chief executive of both the Imported Motor Vehicle Industry Association and its Australian counterpart the Australian Imported Motor Vehicle Industry Association welcomes the changes – noting vehicles up to five years old were an attractive part of the market.

“If implemented by the government, the recommendations will provide increased competition in the market, and will offer greater choice to the motoring public,” Vinsen says.

“In particular, AIMVIA endorses the recommendation that the Government should remove the $12000 specific duty on imported second-hand vehicles from the Customs tariff as soon as practicable,” he says.

The AIMVIA also supports the recommendation that the Government should remove the 5% tariff on all imported passenger and light commercial vehicles, and the luxury car tax and also agrees to the harmonisation of regulation.

Safety a key issue: FCAI

Key industry groups expressed concern with the relaxing of the rules and believe an increase in the number of imported used cars could have a negative impact on the road toll given that record new car sales over the past 10 years have contributed to the lowest number of deaths on our roads since 1935.

The average age of cars on Australian roads only recently dipped below 10 years, still higher than other developed countries such as Japan, the UK and the USA, whose fleet average is six to eight years old. In comparison, New Zealand’s imported used cars rules saw the average age of its fleet has increased from 11 years to 13 years.

On hearing the news, the Federal Chamber of Automotive Industries (FCAI) reacted by noting that increasing the age of cars on Australian roads could have a detrimental effect on road safety.

“We believe safety is paramount,” says FCAI chief executive Tony Weber. “It would be a tragedy to undo all the good work that’s been done by introducing older, sub-standard vehicles.”

Weber said the increase in the number of safer, newer cars onto the Australian market over the past decade deserved at least some of the credit for the reduction in the road toll.

“With significant year-on-year improvements in vehicle technology, it goes without saying that a newer motor vehicle fleet is better for consumers as newer cars are safer, more environmentally friendly, and more reliable.”

A statement from the Australian Automobile Association says: “Discussion on second hand imports must have safety as a top priority, with used vehicles needing to meet current (safety) rules.”

According to the PC report, Ford Australia was among several industry participants that “expressed concern about the effect of such a policy change on new vehicle prices”, which it believes could harm its business.

Earlier this month GM Holden chief Gerry Dorizas said “opening the flood gates to grey imports would cut Australia’s new vehicle market by 50%.”

But, minister Ian MacFarlane said no decision has been taken to relax the restrictions relating to grey imports. “We have no intention of allowing Australia to become the dumping ground for other countries’ old second-hand vehicles,” he says.

“This issue will be considered in detail as part of the government’s review of the Motor Vehicle Standards Act 1989, mindful of the need to maintain the highest safeguards for consumers and the impact of any changes on the domestic car retail market.”