Motor industry calls on the Federal Government to release report on imported used cars

THE motoring industry is in uproar over a proposal that would see used cars dumped in the Australian market from overseas.

Industry needs surety ... New cars sit waiting for owners. Picture: Patrick Hamilton

THE car industry has called on the Federal Government to release a Productivity Commission report on controversial plans to lower restrictions on used imports — or risk irreparable damage to the $72 billion-a-year new-car trade as Australian roads become “a dumping ground”.

Sales of new cars so far this year have already experienced the biggest slump since the former Rudd Government announced changes to Fringe Benefits Tax rules on company vehicles, which the Abbott Government scrapped as soon as it won office.

But industry experts warn the contentious proposal to open Australia’s borders to a “flood” of used vehicles will slam the brakes on new-car sales and cost jobs.

The automotive retail sector employs more than 10 times as many people as Australia’s three car manufacturers — Toyota, Holden and Ford — which are due to close their factories by the end 2017.

The Productivity Commission will submit to the Federal Government on Monday a report on the transformation of the car industry once manufacturing comes to an end, but the Government can delay the release of the findings until late August.

The Federal Government is required to table the Productivity Commission’s report in each House of Parliament within 25 sitting days of receiving it.

But given the limited sitting days, with Parliament in recess until the Federal Budget on 13 May, the Government has until August 26 to release the findings.

A spokeswoman for Federal Treasurer Joe Hockey said his office would not speculate when the report is likely to be published.

The car industry is in a spin over the radical and unforeseen proposal in the Productivity Commission’s preliminary report delivered in December to roll back restrictions on imported used cars, known as “grey imports” because they were never sold as new in Australia.

Under the current regulations imported used cars are restricted to enthusiast vehicles and can only be sold in limited numbers.

Industry needs surety ... New cars sit waiting for owners. Picture: Patrick Hamilton

But so-called ‘grey imports’ have left a blot on the rest of the industry because a high proportion have had their speedometers or their true identities tampered.

“We are completely opposed to relaxing any barriers that are in place,” said Patrick Tessier, the CEO of the Australian Automotive Dealers Association, which represents 4106 new-car franchises nationally.

“Aside from the fact it is next to impossible to trace their true history, these cars are deemed as being at the end of their useful life in Japan, so why should Australia become a dumping ground for them?”

The jobs of more than 90,000 people employed in the wholesale and retail sector of the Australian new-car market would be at risk, said Mr Tessier.

“We are a very significant contributor to the economy. These changes would be devastating and would cost jobs,” said Mr Tessier.

“The industry needs surety and we urge the government to end the speculation on grey imports and release the findings as soon as possible.”

The Productivity Commission claimed that an increase in imported used cars might improve vehicle affordability.

But the industry argues that new-car prices are already at 20-year lows, which has in turn driven down used car values.

Flooding the market would simply dent the value of most cars already on the road, say car value experts.

“Used car prices are already at new lows,” said Vic Moor, from car resale valuers Glass’s Guide.

“Any increase in the arrival of used imports would be detrimental to the value of the majority of used cars already in Australia, so any potential benefit would be cancelled out.”

While the car industry is concerned about the employment and financial impacts of the proposed changes, safety authorities believe an increase in the number of imported used cars could impact road safety.

The average age of vehicles on Australian roads has come down after a decade of record new-car sales. Newer cars with modern safety technology are believed to be a silent contributor to the road toll falling to an 89-year low in 2013.

“We are concerned this could be a backward step for road safety,” said Nick Clarke, the head of the Australasian New Car Assessment Program, a not-for-profit independent body that crash tests new cars.

“Newer cars with modern five-star safety technology have no doubt played a role in improved road safety in Australia. This is a very sensitive proposal that is being considered.”

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