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Talking points for new-car industry shake-up released

Common ground: One of the proposals suggested by a discussion paper looking at the potential for reforms to the Motor Vehicle Standards Act 1989 is allowing car-makers to gain certification for shared platforms rather than individual models.

Discussion paper plays devil’s advocate with Australia’s future new-car market

5 Sep 2014

AUSTRALIA’S unique set of rules governing which cars are allowed to be sold here is costing about $280 million a year, a preliminary review of motor vehicle standards says.

The federal government this week tabled a discussion paper looking at options for reshaping the Motor Vehicle Standards Act 1989, the first time in 14 years that the regulator has looked into the rules that, among other things, greatly restrict the number of “grey” imports allowed here.

The department of infrastructure and regional development discussion paper notes that there has been “significant changes” in the Australian automotive landscape over the past year as the industry moves completely to a market of full-line importers from late 2017.

The discussion paper weighs up several scenarios, including doing nothing, modernising the legislation, adopting an international standard, opening up the Australian market to a flood of second-hand “grey” imports, or just make tweaks to the rules governing grey imports.

The figures show that in 2012-13, only 22,381 of the 1,158,608 vehicles entering Australia’s fleet of 17.2 million vehicles were imported here second-hand.

The figures show the average age of a vehicle on Australia’s roads is still 10 years, which has remained stable for about the past four years and despite about 6.7 per cent of the fleet being updated each year – low when measured against “other comparable countries”, the report notes.

The paper warns that one of the risks associated with abandoning the Act was recently highlighted in Victoria, which introduced an electronic stability control mandate more than a year before a federal mandate came into place, creating a unique compliance burden for brands selling in the state – and a return to the problems experienced before the Act was introduced.

This presented a “strong case” for keeping national legislation in place, it said.

Modifying the existing Act to update it received a tick, as did strengthening the existing framework.

The report notes that while harmony did exist between Australian and international motor vehicle standards, differences did exist, such as more stringent Australian side impact crash test requirements – a measure the report says should not be weakened to match global standards.

One proposal put forward by the report acknowledges a growing trend of car-makers to build multiple vehicles off the same platform. The report suggests that car-makers could gain regulatory approval for platforms rather than individual model lines, reducing the cost of compliance.

On grey imports, the paper recognises that what vehicles should be allowed into Australia would need to be clearly defined, with clear rules to ensure imports added to the safety of the Australian car fleet.

Of major concern, though, was the risk to buyers, who would lose much of the consumer protection they are granted under the current arrangement.

The Federal Chamber of Automotive Industries (FCAI), a united front for Australia’s new-car industry, said it was undertaking a “comprehensive review” of the discussion paper.

“Australia has the most competitive new-car market in the world and this competition brings with it the very latest environmental and safety technologies for consumers,” FCAI chief executive Tony Weber said.

“In addition, the manufacturers of vehicles made for sale in Australia have established comprehensive service environments, which provide consumers with a high-level of support.

This includes the significant investment in the tools and labour force training needed to maintain a modern vehicle,” Mr Weber said.

He said Australia’s highly competitive new-car market meant most models sold in Australia at a cheaper price than other right-hand drive markets.

“We again welcome comments by the government that they have no intention of allowing Australia to become the dumping ground for other countries’ old second-hand vehicles, and we are pleased that the government has articulated that any potential changes to the Act will be comprehensively examined in close consultation with stakeholders,” Mr Weber said.

The department is now seeking submissions on the report, which will close on October 24.

It will also hold a number of public workshops: in Sydney on September 23 Brisbane on September 24 Melbourne on September 26 Adelaide on October 1 and Perth on October 2.

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