'Clarity in pricing' confusion

Today marks the start of a new regime for new-car sales -- one in which advertised pricing must be transparent to the would-be buyer. As mentioned in our earlier report (more here), the ACCC's 'Clarity in pricing' legislation takes effect today, but it doesn't come without some repercussions.

Far from ensuring advertised pricing is clear of obfuscation, the new legislation from the ACCC (Australian Consumer and Competition Commission) has sent dealers and car companies ducking for cover -- and the consumer actually stands to lose.

Only two distributors of imported cars, Ateco Automotive and Suzuki Australia, have officially announced that they and their retailers will resort to a nationwide 'driveaway' pricing scheme in order to comply with the new legislation.

In the case of Suzuki, even that straightforward initiative is compromised by the fact that the company is not national anyway. Distribution of Suzukis in Queensland is handled by an independent company, Mayfairs Wholesale Pty Ltd. Prices, so specifications and variants for the Suzuki range differ between Queensland and the rest of the country. As recently as this morning, Mayfairs' public website continued to cite an 'on-road costs excluded' disclaimer.

Ateco's press release, issued May 19, only applies to its Fiat brand, not Alfa Romeo, Citroen or its two Italian prestige brands, Ferrari and Maserati. For the independent distributor, the ACCC's legislation provides the opportunity to pull back pricing for select models without it appearing to be a discount, per se. As an example, the Fiat Ritmo Dynamic 1.9 JTD was promoted back in January at the already heavily discounted price of $24,990. Now, with driveaway pricing (inclusive of on-road costs), the same car is priced at $25,990 -- a figure well shy of the on-road cost based on the previous list price of the car.

In Ateco's defence, new-car buyers won't complain about the car's price being both discounted and subject to the 'Clarity in pricing' legislation. Andrei Zaitzev, General Manager for Fiat in Australia, seems to concede that the legislation imposes some hardship on importers and manufacturers supplying larger volumes of new cars to the local market.

"There has been a lot of discussion about how these new rules will be introduced and many of the suggestions would seem to make finding the right price harder, not easier for car buyers," says Zaitzev.

"For some car makers this could mean dozens of different prices for the same car, depending where you live in Australia. But not at Fiat. We have taken the decision to follow the spirit of the new rules, not the letter of the law, and make our pricing as simple and as easy to follow as possible."

Pricing on individual new cars across the Carsales Network, in some cases, is advertised as 'POA' (Price on Application), while generic specification information pertaining to new cars will normally include a 'price guide' figure supplied by manufacturers.

The legislation seeks to place the onus on advertisers to provide an all-in price, which can vary from state to state in accordance with different statutory charges applicable. Unfortunately though, it doesn't give the new-car shopper even a ball-park indication of what he or she is likely to pay.

When, in the past, the prospective buyer could compare prices advertised by different dealers for the same car -- taking into account advertised disclaimers -- now the consumer is placed in the situation of shopping around on the phone. And even before the advent of the 'Clarity in pricing' legislation, dealers were loath to offer a price on a new car over the phone, preferring buyers attend the dealership in person.

As a consequence, the buyer will inevitably find it that much harder to research a new car ahead of working out finance options and establishing what his or her car may be worth as a private sale, versus its worth as a trade-in.

For editorial content appearing on sites affiliated with the Carsales Network, the prices will be listed with the qualification 'price guide' in lieu of RRP or recommended retail price. This price will not include on-road costs, unless the car has been actively promoted by the distributor with a 'driveaway' price.

Any reviews or road tests published prior to the imposition of the new legislation will continue to show the price without on-road costs included, barring the exception of cars sold with driveaway pricing.

Prices as tested for reviews will need to include the state in which the test vehicle is registered and the applicable on-road costs. In such cases as the car company is unable to supply the total 'driveaway' cost of the car on test, we will publish 'POA' for the price.

The intention of the new legislation was to aid the consumer by clearing up the bewildering number of pricing incentives offered by dealers, such as with/without charges for compulsory third party insurance, registration, dealer pre-delivery, pay half now, low interest finance, etc.

Unfortunately -- in the best traditions of mice and men -- the new legislation clears up confusion but does so with the unforeseen side effect of reducing the information flow to the consumer.  The question remains: is the consumer better served by the 'Clarity in pricing' legislation?

Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi