The AFR has published a report today on how Aussies are paying far more for cars than our Kiwi counterparts:
Australian drivers will continue paying up to twice as much as New Zealanders for used Audis, Mercedes-Benzes, Porsches and other high-end cars after the Coalition federal government sided with the powerful car-sellers lobby over the Productivity Commission and the Harper Competition Inquiry.
Some second-hand luxury cars cost up to twice as much on Carsales.com.au as they do on Trademe.co.nz…
Auckland-based used-car dealer Hayden Johnston is selling a second-hand Audi A4 2.0T quattro 2010 with 60,000 kilometres mileage for $NZ25,000 ($23,000). An almost identical car with similar mileage would cost $35,000 in Australia, Mr Pendergast said…
The federal government last week rejected a recommendation in the Harper review into competition policy to allow imports of second-hand cars…
Trademe.co.nz data shows the average asking prices for top-selling used cars in New Zealand are surprisingly low: $2200 for a Toyota Corolla, $7400 for a Toyota Hilux and $2100 for a Subaru Legacy.
With the local automotive industry scheduled to shutter by 2017, there will no longer be any justification for punishing Australian consumers with over-inflated car costs. New Zealand consumers have gained greatly from opening its market to high quality used cars, lowering costs for consumers without compromising the safety of its vehicle fleet.
As reported by the Productivity Commission last year, “a survey of prices for second hand Toyota Corollas found that vehicles of similar mileage were on average almost 20 per cent cheaper in New Zealand than in Australia”. Moreover, a 2005 study by researchers at the Monash University Accident Research Centre supported the safety efficacy of used imports, finding that “the used imports [into New Zealand] were as safe as those sold new when compared on a year of manufacture basis, and that the difference in crashworthiness performance between an average used imported vehicle and an average new vehicle was attributable to the date of manufacture of the used vehicle rather than its previous use in its country of origin”.
Of course, allowing the importation of high quality second-hand cars is only part of the solution to lowering car costs for Australian consumers. Other worthy measures include:
- abolishing the 5% tariff on automotive imports;
- scrapping the the luxury car tax, which is set at 33% on the marginal cost of vehicles above $60,316, and serves as a defacto tariff designed to raise the cost of more expensive imports and make local models, such as the Fairmont Ghia, more attractive; and
- Scrapping Australia’s unique technical standards in favour of global rules, thereby opening the market to a wider array of foreign cars and reducing overall import costs. Indeed, the PC report also recommended accelerating “the harmonisation of Australian Design Rules with the United Nations Economic Commission for Europe (UNECE) Regulations and the mutual recognition of other appropriate vehicle standards”.
While there would obviously be negative revenue impacts from the above reforms, namely the abolition of tariffs and the luxury car tax, such concerns could be overcome by broadening the tax base through genuine tax reform. This way, the tax burden would be spread more evenly across the economy rather than concentrated on the car industry – a far more efficient and competitively neutral outcome.
Again, given that the car industry is set to close anyway by 2017, the least the government could do is soften the blow on consumers and increase their spending power.
It’s a shame that the Coalition has chosen to side with the automotive industry rent-seekers, kicking consumers’ interests to the curb.
