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NEWS
Grey imports headed our way
But Holden exec rejects findings of Productivity Commission automotive industry reviewHolden is embarked on a crusade to block commercial scale volumes of grey imports selling in Australia.
The company's MD, Gerry Dorizas, raised the issue during the launch of the updated Trax last week, but it was his Director of Sales, Peter Keley, who articulated the company's antipathy to opening up the market for grey imports. Holden had invited media representatives from New Zealand to attend the launch, and one of the Kiwi journalists asked whether the company's head office had formulated its position based on the situation in the land of the long white cloud.
"I think it's safe to say that the FCAI locally has spent a fair bit of time with the MIA [Motor Industry Association] in New Zealand to determine what the impact has been in New Zealand," Keley responded. "I guess it dates back to '84 when we had this massive influx – or open border as we call it.
"At the end of the day whilst you might be in a position where you provide consumers with a safer car, the impact is that the car parc ages. The average age of the car in New Zealand is some 13 years old now.
"If Australia turns into an unregulated market... [like] New Zealand... look at what it has done in New Zealand from a new car perspective. Potentially you may see a 1.1 million car market turn into an 800,000 car market. That's the reality of it."
For many years in New Zealand, the situation was far worse than that. Over two thirds of all first-time motor vehicle registrations in the country were used cars. And it only takes a few episodes of 'Motorway Patrol' to observe the large representation of grey import clunkers on the road there.
Holden's objections are founded on the fact that new-car affordability is better than it has been in 38 years, thanks to high wages, low interest rates and the strength of the Australian dollar. The company argues that wholesale marketing of grey imports would "undermine the new car industry and damage brands."
Furthermore, it would "adversely affect environment and safety performance." And there is a consumer-oriented component to the argument as well, with Holden stating that grey imports will "reduce residual values and increase lease rates on salary packaging."
Holden's concerns have arisen out of a recommendation by the Productivity Commission that the federal government permit commercial operations to import and distribute grey imports on large volumes; grey imports being cars that have typically been registered and used in other countries before being shipped to Australia.
In the event that Keley's scenario comes to fruition – the new car market drops from 1.1 million to 800,000 – that would impose severe stress on employment among retail dealers and at head office/regional office level. Some dealers would be forced to close and some brands may find the Australian market simply too hard to compete in – driving them to close up. Businesses supporting wholesalers and retailers would also suffer, with a snowballing effect like an analogue of the parts suppliers for the local manufacturing industry. That imbalance wouldn't necessarily be addressed by grey import businesses.
The FCAI (Federal Chamber of Automotive Industries) has previously attacked the findings of the Productivity Commission, but hadn't specifically responded to the Commission's call for grey imports to be permitted. Earlier this month the Chamber issued a press release concerning a study conducted by industry analyst IHS at the behest of the FCAI. The study found that Australia was on an even footing with the UK for new car pricing – and ahead in some cases.
An industry insider has told motoring.com.au that large volumes of grey imports will inevitably damage the brand image for importers, citing the Toyota HiLux Surf as one example. Basically a diesel-engined 4Runner, the Surf is not legally approved for the same towing capacity as the local spec 4Runner. Even though Toyota Australia has not sold the Surf here, some examples have been brought to Australia and sold under a low-volume import scheme such as the Registered Automotive Workshop (RAW) Scheme.
As of now, the FCAI is yet to denounce the Productivity Commission's recommendation concerning grey imports – the full report is yet to be tabled – and the FCAI may also be awaiting the Department of Infrastructure to complete its review of the Motor Vehicle Standards Act of 1989. Terms of reference for that review include reducing the regulatory burden on business and enhancing productivity without detriment to safety, environmental and security issues.
More importantly, for the consideration of large volume grey imports, is whether the act as it stands would "facilitate effective and proportionate compliance by industry and consumers bringing new and used road vehicles to the Australian market for the first time."
The terms of reference for the review make it abundantly clear that it "shall have regard to the stakeholder views expressed in the Public Consultation Report" that was compiled in August of last year. And in a further hint the review will be guided by the Productivity Commission's findings, the terms of reference will also "have regard" for "identified administrative issues and best practice regulatory principles and outcomes from the Productivity Commission’s inquiry into support for the Australian Automotive Manufacturing Industry."
The consultation paper for the review is available for downloading, as are the submissions from stakeholders, including the FCAI's own submission.
Picture of 1989 Toyota HiLux Surf courtesy of Dave_7/Wikimedia Commons
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Written byKen Gratton
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