Grey imports: ADRs a prohibitive barrier?
Proposed changes to the rules governing second-hand car imports into Australia may have more hurdles than a simple tariff changeThe January 2014 PC report suggests used car imports would benefit consumers, lowering prices and delivering a wider range of choice.
But even aside from the consumer-related issues some suggest it will create, the suggestion sidesteps a key component of the importing process – the requirement for all cars sold Down Under to satisfy Australia Design Rules (ADRs).
ADRs were set up and have evolved over the years to ensure the safety and integrity of any vehicle sold here. Although they are aligned with some overseas regulations (chiefly European market rules), ADRs often contain Australian-specific requirements.
As part of the process of offering a new car model for sale Down Under, all cars must be proven to satisfy relevant ADRs. While low volume vehicles (25 or 100 units) may be given dispensations regarding the exact tests and rules they must satisfy, no such leeway is given to volume sellers.
Indeed, mainstream cars are tested for and must gain full volume compliance. This allows the entity which applied for the compliance certificate to import unlimited volumes of the make/model.
But here’s the thing: only one entity may hold a full volume compliance on any model. In other words, significant imports of existing and related models will only be possible for vehicles not currently complied or, in the case of related models, with the express permission of the original manufacturer or importer.
The way we read it, to facilitate significant import volumes as proposed by the PC, the Federal Government will need to change this regulation.
Alternatively, it could significantly water down ADR requirements for second-hand cars – hardly a direction manufacturers and existing importers will be keen to support without similar reductions in new car requirements.
Much has been made of the benefits of grey imports. Proponents suggest non-traditional importing channels offer additional choice and thanks in part to lower infrastructure costs, lower prices.
Organisations clamouring to denounce the easing of used-car import restrictions as recommended in the report include not just the local car industry – who are all due to become full-line importers – but also industry bodies such the Federal Chamber of Automotive Industries, the Australian Automobile Association and the Australian Automotive Dealers Association.
These detractors say the pitfalls include spare parts complexity and poor availability, access to proper servicing tools and ineffective recall monitoring, as well as different on-road and crash performance.
They also play up the risk of not knowing the car’s ownership history, or even its legal bona fides.
While the organisations clearly have vested interests and are playing their hands accordingly, even the most ardent supporter will agree, question marks regarding the benefits of grey imports exist.
But at this time, even their pronouncements are moot. In the absence of advice to the contrary, ADRs remain the elephant in the room.
with staff
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