ACCC aims for 'Clarity in pricing'

The Australian Competition and Consumer Commission (ACCC) has motor car traders in its sights with the latest changes to the Trade Practices Act (TPA).

'Drive away, no more to pay' has been a catch-cry over the years for car companies looking for an advantage over longer established brands -- by offering a discount that shouldn't rebound on resale values.

But that 'on-the-road' price will now become the standard for motor vehicle advertising. It may not be discounted necessarily, but it must be inclusive of all statutory costs.

The change has come about through the ACCC's 'Clarity in pricing' amendments for the Trade Practices Act 1974. This act is the primary act of legislation to protect consumers.

"The new law will not only mean consumers have accurate price information, but also that businesses have a more level playing field on which to compete when it comes to price representations," ACCC Chairman, Graeme Samuel (pictured), was quoted as saying in a press release.

"Under the current law a business that does the right thing by consumers and shows the total price they can expect to pay, may be disadvantaged if a competitor elects to feature only one part of the total price, along with a disclaimer or advice that other amounts (like statutory charges) will also be imposed. That will not be the case after
25 May."

'Clarity in pricing' places an onus on motor car traders to advertise their cars with all costs aggregated in one sum. Under the amendments, they can still advertise the components of the price separately -- but in addition to the 'driveaway' price. It is, according to the amendments to the Act, no longer sufficient to refer generically to 'on-road costs' and the total must be given equal precedence in the ad as any price component.

In other words, the advertised total of $18,990 must be the same font, same colour and printed on the same colour background as the $15,990 list price before on-roads are applied.

The ACCC is also clear about advertised prices including dealer pre-delivery charges. These charges have been a contentious issue with new-car buyers over a long time, but also constitute a point of competitive difference between retailers, with outlets massaging the fee charged to prepare and deliver new vehicles for an all-up price that is lower than a competitor's.

Pre-delivery charges will have to be included in the advertised price also, on the basis that the advertised price can vary from one retailer to the next, according to how much the retailer is prepared to discount the pricing components -- the pre-delivery charge among them.

On the question of factory rebates for retail buyers; the TPA leaves no doubt that the dealer must outline the price to be paid by the buyer at the time of delivery, not inclusive of any figure to be remunerated after the sale.

If you buy a car for an advertised total of $35,000 -- but you have to pay $36,000 initially because the total includes a factory rebate of $1000, the dealer is in breach of the (amended) TPA.

The ACCC has also drawn the attention of dealers to 'pictorial' advertisements. Any ad with a picture of a motor vehicle must reflect the correct specification of car for the price advertised. Dealers are not permitted to picture a newer vehicle or one with extra-cost options and accessories fitted for an advertised price not consonant with the image of the vehicle.

Two sectors of retail industry have been specifically targeted by the revised legislation; the motor trade being one and the tourism industry being the other. The ACCC has prepared guidance material to assist the two sectors during the transition to the new advertising constraints, which will come into force from May 25.

Interested parties can download the material from the ACCC's website, here.

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