Hot Topic: Proposed reform of parallel imports of new cars

The Federal Government recently announced that it would look to amend the Motor Vehicle Standards Act to allow the parallel import of new motor vehicles …

… these changes are proposed to come into effect in 2018 and will allow individuals to import new vehicles directly from countries with comparable vehicle standards to Australia.

The Australian Government hopes that this reform will provide Australian consumers with greater choice when purchasing vehicles and wider access to vehicles with the latest safety and environmental technologies. It is also hoped to improve alignment of Australian Design Rules with international standards.

On the other hand, Motor Dealer Industry representatives are currently in dialogue with Canberra, meeting with politicians to reinforce the Motor Vehicle industry’s position on the matter. Industry representatives believe there are pertinent issues that have not been considered by the Australian Government which could be detrimental to the dealership network and their consumers. For example, the potential impacts on the repair and parts supply industry, Australian Consumer Law responsibilities in relation to non-transferable overseas warranties and the overall impact on the new and used car traders industry, are all up for discussion.

So what does this mean?

1. Imported new vehicles are no longer required to carry physical identification plates and instead there will be an online register of approved vehicles.

2. It will allow consumers to personally import “new” vehicles on the following conditions:

  • Cars must be right hand drive.
  • Vehicles must be sourced from Japan or the United Kingdom, however other right hand drive markets may be considered in the future. The only exception to this being motorcycles which may be imported from the USA and the EU.
  • The vehicle must be less than 12 months old and have less than 500km on the odometer.
  • A limit of one vehicle per person within a two year period.
  • Vehicles personally imported will be required to undergo an independent third party inspection to make sure they meet Australian standards and to see if any modifications are necessary (for example, child restraints).

Changes to used cars

While the reform mainly deals with the parallel import of new vehicles, significant changes to the importing of used vehicles are also proposed. Some of these changes are as follows:

1. From 2018 the Australian Government will amend the Customs Tariff Act 1995 to remove the $12,000 special duty on imported used vehicles.

2. The current requirement that “older imported vehicles” be pre-1989 build vehicles will be changed to “older than 25 years” to allow greater access to a wider range of vehicles.

3. There will be no limit on the number of vehicles that may be imported by “Registered Automotive Workshops”.

4. The Register of Specialist and Enthusiast Vehicles criteria has been revised and vehicles will now be eligible if they meet any one of the following five criteria:

  • High-performance vehicles (determined by power to weight ratio).
  • Vehicles that produce an environmental performance (for example, emissions of carbon dioxide per kilometre) significantly superior to mainstream vehicles in Australia.
  • Mobility vehicles, that is manufactured with special features to assist people with a disability.
  • Rare vehicles of which only a very limited number have been produced.
  • Vehicles originally manufactured as left-hand-drive, where right-hand-drive versions do not exist (these vehicles will need to be converted to right hand drive before they enter the Australian market).

Buyer beware

As most vehicle warranties apply only in the country where the vehicle was purchased, warranties on parallel imports may not be honoured in Australia. Existing Australian Consumer Law protection will offer some protection, however it is limited as the goods are sourced outside of Australia. If warranty work is required, the vehicle would likely need to be sent back to the country from which it was originally purchased.

It is also worth noting that vehicles not initially sold into the Australian market by vehicle manufacturers via a dealership will likely remain outside of any manufacturer safety recall. Therefore the cost of returning a vehicle due to a safety recall campaign will be the responsibility of the vehicle owner.

How will this reform affect dealers?

While the effect of this reform on the dealership network is not yet known, the Australian government believes that it is not expected to make a material difference to dealers overall as the majority of new vehicles will continue to be sold through the current automotive retail market. The Australian Government commissioned an independent group to undergo economic modelling on the reform and it found that the total number of cars likely to be imported under the personal new imports scheme would only be around 30,000 per annum.

Like to know more?

For further information please click here

In addition, should you wish to discuss this matter further, please contact one of our Fordham Motor Dealer Services leadership team.

Download Hot Topic-Car imports-February 2015

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