John Menadue has asked the pertinent question of why the Australian Government continues to ban so-called ‘grey’ imports of second-hand cars when there is no longer an industry to protect?
The Australian Motor Industry Federation and the Federal Chamber of Automotive Industries have successfully lobbied the Australian government to continue restrictions on the imports of second-hand vehicles.
The Turnbull government accepted many of the recommendations of the Harper Review into competition policy, but it decided to continue Australia’s archaic system where there is a $12,000 specific customs duty on second-hand vehicles. Retailers are further restricted because they can only import a single second-hand vehicles at a time…
A large number of quality used cars could be imported for example from Japan where the ‘Sharken’ system stipulates that when the registration of a new car expires after five years, it must be rigorously tested at that time and every three years thereafter. To support their car manufacturers, Japanese governments encourage Japanese consumers to buy new cars and sell their old cars. That is what Sharken is designed to do. As a result there are a large number of quality second-hand cars on the market in Japan. But it is very hard for Australian retailers and consumers to access this market…
In short, the actions of the Australian Motor Industry Federation and the Federal Chamber of Automotive Industries in opposing liberalization of second-hand vehicle imports is a clear example of the power of rent-seekers to extract wealth from consumers.
Well said.
The Federal Chamber of Automotive Industries has spuriously argued that Australian safety would be placed at risk by allowing grey imports.
However, the Productivity Commission’s (PC) report into Australia’s Automotive Manufacturing Industry, released in 2014, explicitly cited a 2005 study by researchers at the Monash University Accident Research Centre, which found 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”.
The PC report also specifically recommended relaxing controls on so-called “grey” imports of second-hand cars, noting that Australian consumers are being fleeced, particularly when it comes to purchasing higher-end vehicles. The PC noted that “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”.
New Zealand imports around 95% of its used cars from Japan, according to NZ Transport Agency data. And the last time I checked, Japan was a highly developed country with excellent vehicle standards, whereas New Zealand did not have a widespread problem of defective vehicles on its roads.
With the local car industry now extinct, there is zero rationale in restricting used car imports. The Government should follow New Zealand’s lead and allowed grey imports, thus increasing consumers’ spending power and potentially lowering the average age of Australia’s vehicle fleet.
AutoExpert.com.au has a good rant on the subject:
