Why grey import cars are a bad idea | comment

As if the collapse of the entire Australian car manufacturing industry isn’t enough to deal with, now the Productivity Commission wants to import cheap second-hand cars by the shipload.

On the surface this may sound like a great idea to provide affordable motoring to the masses. But in reality it would be a disaster, in automotive terms, equivalent to letting in myna birds, cane toads and other imported pests.

For starters, used cars from Japan won’t be any cheaper than the secondhand vehicles that were designed and engineered for our conditions.

Presumably the Productivity Commission made this suggestion so it could hold a gun to the industry’s head, in case anyone thought about raising prices once Australia doesn’t have a car manufacturing industry to protect.

But the Productivity Commission clearly hasn’t read its own report. Australian new-car prices are at 20-year lows, we are the most competitive new-car market in the world, with more than 65 brands on sale here (30 per cent more than North America and Europe). It’s why the Australian car manufacturing industry is on death row.

Cheap new cars, in turn, drive down used car prices because people would rather treat themselves to new-car smell than buy someone else’s old banger.

So that’s the first myth busted. The other issues are more serious. “Grey import” is the term given to cars that were never sold as new in Australia even though they wear familiar badges from Toyota, Nissan, Honda, Mazda and others. No-one knows why they are called “grey” imports. Perhaps it’s because they fall into a grey area when it comes to getting them fixed.

Although Toyota, Nissan, Honda, Mazda et al made the vehicle, if they didn’t intend them to be sold here then they’re not obliged to stock parts. Under the current grey import rules we already bring in specialist models in relatively small numbers for enthusiast buyers who know what they’re getting into (the curvy Nissan S-Cargo van that looks like a snail, or the cheeky Nissan Figaro convertible that looks like a Noddy car).

But any move to open the floodgates to de-restrict grey imports has the potential to leave car buyers open to fraudulently-certified, unsafe and potentially stolen vehicles that will be expensive to insure because parts will be difficult to source -- serious issues which consumer bodies and the industry have aimed to fix over the past decade or more.

News Corp Australia Cost of Living Editor John Rolfe has already exposed some of the widely known rorts used by a number of existing dealers of grey import cars. It’s next to impossible to track the true history of the vehicle, so you don’t know how far it’s really been driven, if it’s been pieced together from two or more cars after a major crash, or indeed if it’s been stolen and given a new fake identity.

It’s true that some of the parts on grey import cars sold here fit some of those originally sold in Japan -- the silver lining that the grey import industry likes to peddle -- but it’s certainly not the majority. The rorting of grey imports is so rife I once had a very well known dealer of such vehicles say to me “we don’t wind back speedometers on cars any more than the other guys do”.

The grey importers are good at supplying what appear to be legitimate documents. If there’s nothing to hide why did some of the bigger grey importers come down heavy -- and by heavy, I mean violence was allegedly threatened -- recently on an enterprising local who found a way to source a more accurate history check on the cars coming from Japan?

So, exactly how has the whole grey import industry been able to prosper in Australia? Japan taxes cars at a higher rate once they reach three years old, so second-hand cars are cheap there and dealers from other countries snap them up because they can make a bigger profit even though they have to ship a car across an ocean.

Japan imposes the high tax rate on older cars to keep its automotive manufacturing economy moving. So not only would Australia be taking care of Japan’s scrap, we would be, by default, propping up Japan’s car industry even further.

Mass-market grey imports do have a place in the world: they make perfect sense for developing countries in the Asia-Pacific region. But they make no sense for Australia.

New Zealand de-restricted grey import cars when its car manufacturing industry shut in the 1990s. But the New Zealand government of the day had different reasons to open its doors to these cars. It needed to provide the masses with newer and more affordable secondhand cars as the average age of vehicles on the road there was among the oldest in the developed world.

In other words, grey imports were a step forward for the New Zealand motoring public, even if it put a sizeable dent in new car sales at first. The downside is “grey imports” are so rife that the average age of cars in New Zealand is now increasing and they are potentially having the opposite effect.

In Australia, we’ve worked hard to cram airbags into cars and insist on a higher level of safety for vehicles imported here. And to record the lowest road toll in 89 years in 2013, in which newer cars played a significant role. To think that the Australian Government would lower the bar and make car buyers more vulnerable to fraud, dodgy repairs and infect the market with less safe vehicles is beyond comprehension.

This reporter is on Twitter: @JoshuaDowling