Vehicle Import Regulation Reform - What is Happening ?

July 29, 2017
Australian Compliance, General News, Import Regulations

Latest Update December 2017 ~

2019 Vehicle Import Regulation Changes – Draft Legislation Announced

When first announced in Feb 2016 the proposed import regulation reforms sounded very positive — not only for motoring enthusiasts but for all Australians.

AND a long time coming.

The Need for Import Regulation Reforms

The current import regulations are restrictive to trade and lead to much higher prices on new cars by maintaining a monopoly situation and forcing consumers to buy from a car dealer within Australia.

The prospect of losing their protected market and inflated profit margins sent Australian new car dealers into a spin when reforms were first proposed.

Since then they’ve done everything they can to stop any changes, including:

claims that their own product sold in other countries would be unsafe in Australia
refusing to honour international factory recalls
refusing to service or supply parts for vehicles not sold through them

Opportunities for Dealers and all Australians

To see the opportunities provided and the new jobs and markets that would be created, you need only look at how Toyota dealers in New Zealand have responded positively to deregulation of their market.

The below video shows how Toyota NZ’s Signature Class system works for secondhand vehicle imports:

Allowing direct vehicle imports would also create a large number of new jobs in the import, parts, servicing and support sectors.

Our opinion is that these jobs would far exceed those lost with the long drawn out departure of the financially nonviable vehicle manufacturing sector from Australia.

Creating new employment and business opportunities by recognising the commercial reality of the situation forms a natural and sensible response to a changing world, and is the role of a good Government.

Why hasn’t anything happened to change these unfair regulations until now ?

The Govt. has not acted due to scaremongering / lobbying by dealers and pressure from the heavily-subsidised vehicle manufacturing sector – a relatively small number of jobs but with a loud political voice.

New car dealers stand to lose hundreds of millions of dollars per year if consumers were able to buy vehicles directly from the cheapest source.

With this much to lose (and putting moral issues aside) it is clearly in their best business interest to spend millions on lobbyists to fight change.

And since when do moral issues concern big business anyway ?

So given the much smaller secondhand vehicle import industry, the situation is very much like David and Goliath.

What is at Stake ?

Access to new and secondhand vehicles at the best international pricing makes obvious sense for the Australian consumer and aligns with the Govt’s desire for free trade.

With free choice the consumer could then:

save money on the same vehicle
upgrade to a newer / better quality / more efficient vehicle for the same or lower price
spend more to obtain hybrids or other models not previously available

The Effect ?

With vehicles costing less and a proportion of buyers naturally choosing to upgrade, there would be a significant improvement on safety and the environment.

The most unsafe and inefficient vehicles would be progressively removed from Australian roads.

The average age of the Australian vehicle fleet would be reduced.

This would in turn lead to a reduction of deaths and injuries on Australian roads.

These are all outcomes the Govt. has said they want, as of course would any reasonable person with a genuine interest in the welfare of Australians.

All these things WOULD happen with a deregulated and independently monitored industry.

What the Experts Say

A Productivity Commission Report in 2014 and two other reports conducted for the Govt. in 2014 and 2015 have all supported the lifting of import restrictions.

Australian Productivity Commission Report 2014

In March 2014 this concluded that allowing the direct personal import of vehicles by consumers would lead to lower vehicle prices and greater vehicle variety.

The Report recommended lifting import restrictions.

Castalia Report 2014

Castalia Advisory Group produced their first Govt. commissioned report in July 2014.

Their analysis looked at the costs and benefits of deregulating the trade in used imported cars and showed significant net welfare gains between $805 million and $1,943 million over a 10 year period.

View the 2014 Castalia Report

Castalia Report 2015

This second report in March 2015 focused on the effect of deregulating the trade in vehicles between 0 and 5 years old.

It predicted significant net safety and environmental benefits over a ten year period of between $703 million for new vehicles and $1,166 million when de-regulating used imports up to the age of five years.

View the 2015 Castalia Report

NOTE: The Govt. DID NOT RELEASE the Castalia Reports to the public.

The 2015 Report ONLY became available in May 2017 at the request of Senator Kim Carr:

**What are the latest official developments ?**

NONE.

There have been NO updates from the Govt. for the last 9 months on any of the proposed changes or transition periods.

This puts jobs at risk as it leaves those in the secondhand vehicle import industry in a state of limbo, unable to make reasoned and informed business decisions and with an unknown future hanging over them.

As with the introduction of SEVS in 2002, there has been no mention of compensation for those who have spent considerable time, money and years of their lives to jump through the hoops of the current scheme.

They now face losing the bulk of their business at a moment’s notice when the Minister deigns to issue a Press Release, with no indication there will be advance warning.

No warning, no compensation.

This is particularly unfair given the time the Govt. has already taken to consider the changes.

The industry has been contracting for many years, with requests for the Govt.’s help to revitalise import options and to reduce costs falling on deaf ears.

The marked reduction in import numbers (now down to about 5,000 vehicles per year) has been due to natural changes in the pricing and availability of popular models and the fact that the import regulations have not kept pace with reality.

We estimate that more than half of those people employed in the secondhand vehicle import industry in recent years have already lost their jobs or been forced to find other work.

Against the best advice and without regard to the survival of the industry itself, since 2014 the Govt. has progressively reduced the scope of reforms being considered:

2014 Full deregulation considered

2015 Back-step to allow vehicles up to 5 years old only

2016 Another back-step to allow new vehicles only

2017 Complete backflip on what was promised ? We wait to see…

Behind the Scenes

Dealers and online paid mouthpieces continue to spread shameless self-motivated propaganda against the changes rather than embracing the overwhelmingly positive impacts for Australian consumers and businesses, and the new opportunities it would open up for the dealers themselves (see NZ’s Signature Class system above).

In the absence of official Govt. updates, the following is all we are able to currently surmise.

General industry sentiment is that there is currently too much political inertia for the Govt. to pass import regulation changes in Parliament if they include the parallel import of new vehicles by individuals.

In 2016 Minister Paul Fletcher unequivocally stated that this WOULD happen.

So we believe this is the main issue the Govt. has been grappling with and why further updates have not been provided for so long.

At the root of the problem — politicians that the Govt. needs to support the changes in order for them to become law are concerned they will lose their seats in the next election should they support the parallel import of new cars.

They have formed this view based on a wholly negative campaign mounted by car dealers located in their electorates.

On the “positive” side, there doesn’t seem to be any great opposition to an update to SEVS, however this is probably because the changes as they stand would eliminate 70% of the current import market by excluding people movers such as the Toyota Estima, Nissan Elgrand and Mitsubishi Delica.

Alone, that could reduce total import numbers to 1,500 per year — and based on those figures about 70% of businesses in the industry would also face closure, putting those they employ out of work.

While the proposed changes would allow more hybrids, electric and other vehicles to be imported under new environmental criteria, it is hard to say how many vehicles this would actually represent.

Limited production run models would also be allowed however this would represent very few vehicles annually due to the rarity and high cost of these vehicles.

Our current view is that the 25 Year Rule is likely to go ahead in some form.

Whether this allows all cars based on age alone or whether additional restrictive criteria will be imposed on these vehicles will obviously have a great impact on whether this rule is actually viable and useful for enthusiasts.

If it operates in a similar way to the current 1988 and older rule then it would be positive and allow a lot of desirable vehicles that have not before been available for import to Australia.

So we await further detail with interest.

Note that registration of vehicles imported under this 25 years and older option would still be handled differently by each State / Territory with regard to “compliance” type changes that need to be made.

What can you do ?

The official stakeholder comment periods have ended so the Govt. no longer needs to go through the motions of listening to external views (industry or the public).

It is still worthwhile to contact Minister Paul Fletcher to make your views known and demonstrate that keen community interest remains for positive change in this area.

It may be more beneficial however to contact the following politicians with some influence behind the scenes in this matter, when it comes time to vote on the changes.

Even better if you live in their electorate.

For your views to be heard — always keep communication to the point and factual, listing any benefits clearly in dot form and include evidence where available.

Vehicle Import Regulation Reform – What is Happening ?

Latest Update December 2017 ~

2019 Vehicle Import Regulation Changes – Draft Legislation Announced

When first announced in Feb 2016 the proposed import regulation reforms sounded very positive — not only for motoring enthusiasts but for all Australians.

AND a long time coming.

The Need for Import Regulation Reforms

The current import regulations are restrictive to trade and lead to much higher prices on new cars by maintaining a monopoly situation and forcing consumers to buy from a car dealer within Australia.

The prospect of losing their protected market and inflated profit margins sent Australian new car dealers into a spin when reforms were first proposed.

Since then they’ve done everything they can to stop any changes, including:

claims that their own product sold in other countries would be unsafe in Australia

refusing to honour international factory recalls

refusing to service or supply parts for vehicles not sold through them

Opportunities for Dealers and all Australians

To see the opportunities provided and the new jobs and markets that would be created, you need only look at how Toyota dealers in New Zealand have responded positively to deregulation of their market.

The below video shows how Toyota NZ’s Signature Class system works for secondhand vehicle imports:

Allowing direct vehicle imports would also create a large number of new jobs in the import, parts, servicing and support sectors.

Our opinion is that these jobs would far exceed those lost with the long drawn out departure of the financially nonviable vehicle manufacturing sector from Australia.

Creating new employment and business opportunities by recognising the commercial reality of the situation forms a natural and sensible response to a changing world, and is the role of a good Government.

Why hasn’t anything happened to change these unfair regulations until now ?

The Govt. has not acted due to scaremongering / lobbying by dealers and pressure from the heavily-subsidised vehicle manufacturing sector – a relatively small number of jobs but with a loud political voice.

New car dealers stand to lose hundreds of millions of dollars per year if consumers were able to buy vehicles directly from the cheapest source.

With this much to lose (and putting moral issues aside) it is clearly in their best business interest to spend millions on lobbyists to fight change.

And since when do moral issues concern big business anyway ?

So given the much smaller secondhand vehicle import industry, the situation is very much like David and Goliath.

What is at Stake ?

Access to new and secondhand vehicles at the best international pricing makes obvious sense for the Australian consumer and aligns with the Govt’s desire for free trade.

With free choice the consumer could then:

save money on the same vehicle

upgrade to a newer / better quality / more efficient vehicle for the same or lower price

spend more to obtain hybrids or other models not previously available

The Effect ?

With vehicles costing less and a proportion of buyers naturally choosing to upgrade, there would be a significant improvement on safety and the environment.

The most unsafe and inefficient vehicles would be progressively removed from Australian roads.

The average age of the Australian vehicle fleet would be reduced.

This would in turn lead to a reduction of deaths and injuries on Australian roads.

These are all outcomes the Govt. has said they want, as of course would any reasonable person with a genuine interest in the welfare of Australians.

All these things WOULD happen with a deregulated and independently monitored industry.

What the Experts Say

A Productivity Commission Report in 2014 and two other reports conducted for the Govt. in 2014 and 2015 have all supported the lifting of import restrictions.

Australian Productivity Commission Report 2014

In March 2014 this concluded that allowing the direct personal import of vehicles by consumers would lead to lower vehicle prices and greater vehicle variety.

The Report recommended lifting import restrictions.

Castalia Report 2014

Castalia Advisory Group produced their first Govt. commissioned report in July 2014.

Their analysis looked at the costs and benefits of deregulating the trade in used imported cars and showed significant net welfare gains between $805 million and $1,943 million over a 10 year period.

View the 2014 Castalia Report

Castalia Report 2015

This second report in March 2015 focused on the effect of deregulating the trade in vehicles between 0 and 5 years old.

It predicted significant net safety and environmental benefits over a ten year period of between $703 million for new vehicles and $1,166 million when de-regulating used imports up to the age of five years.

View the 2015 Castalia Report

NOTE: The Govt. DID NOT RELEASE the Castalia Reports to the public.

The 2015 Report ONLY became available in May 2017 at the request of Senator Kim Carr:

What are the latest official developments ?

NONE.

There have been NO updates from the Govt. for the last 9 months on any of the proposed changes or transition periods.

This puts jobs at risk as it leaves those in the secondhand vehicle import industry in a state of limbo, unable to make reasoned and informed business decisions and with an unknown future hanging over them.

As with the introduction of SEVS in 2002, there has been no mention of compensation for those who have spent considerable time, money and years of their lives to jump through the hoops of the current scheme.

They now face losing the bulk of their business at a moment’s notice when the Minister deigns to issue a Press Release, with no indication there will be advance warning.

No warning, no compensation.

This is particularly unfair given the time the Govt. has already taken to consider the changes.

The industry has been contracting for many years, with requests for the Govt.’s help to revitalise import options and to reduce costs falling on deaf ears.

The marked reduction in import numbers (now down to about 5,000 vehicles per year) has been due to natural changes in the pricing and availability of popular models and the fact that the import regulations have not kept pace with reality.

We estimate that more than half of those people employed in the secondhand vehicle import industry in recent years have already lost their jobs or been forced to find other work.

Against the best advice and without regard to the survival of the industry itself, since 2014 the Govt. has progressively reduced the scope of reforms being considered:

2014 Full deregulation considered

2015 Back-step to allow vehicles up to 5 years old only

2016 Another back-step to allow new vehicles only

2017 Complete backflip on what was promised ? We wait to see…

Behind the Scenes

In the absence of official Govt. updates, the following is all we are able to currently surmise.

General industry sentiment is that there is currently too much political inertia for the Govt. to pass import regulation changes in Parliament if they include the parallel import of new vehicles by individuals.

In 2016 Minister Paul Fletcher unequivocally stated that this WOULD happen.

So we believe this is the main issue the Govt. has been grappling with and why further updates have not been provided for so long.

At the root of the problem — politicians that the Govt. needs to support the changes in order for them to become law are concerned they will lose their seats in the next election should they support the parallel import of new cars.

They have formed this view based on a wholly negative campaign mounted by car dealers located in their electorates.

On the “positive” side, there doesn’t seem to be any great opposition to an update to SEVS, however this is probably because the changes as they stand would eliminate 70% of the current import market by excluding people movers such as the Toyota Estima, Nissan Elgrand and Mitsubishi Delica.

Alone, that could reduce total import numbers to 1,500 per year — and based on those figures about 70% of businesses in the industry would also face closure, putting those they employ out of work.

While the proposed changes would allow more hybrids, electric and other vehicles to be imported under new environmental criteria, it is hard to say how many vehicles this would actually represent.

Limited production run models would also be allowed however this would represent very few vehicles annually due to the rarity and high cost of these vehicles.

Our current view is that the 25 Year Rule is likely to go ahead in some form.

**What are the latest official developments ?**