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Second hand vehicles from overseas - not well received

Recent statistics indicate that the Australian car market is one of the most competitive in the world and is beginning to pick up after a number of slow months.

The Productivity Commission's final report for its Inquiry into Australia's Automotive Manufacturing Industry has been released. In the report, the commission said relaxing the restrictions on imported second-hand vehicles into the country would have a number of benefits to consumers including lower prices, improved features and greater choice.

There would some limits to this importation, though. The commission states that only vehicles manufactured within five years of the importation application date would be allowed. As well as this, only countries with vehicle design standards consistent with Australia would be allowed to export the second-hand cars.

However, this finding was not welcomed by the federal government nor the Federal Chamber of Automotive Industries (FCAI).

Last month, Minister for Industries Ian MacFarlane stated that the government has no intention of making Australia a dumping ground for other countries' castaway vehicles. He also said it was very unlikely to happen anytime in future.

With Australian's taking advantage of improved environmental and safety technologies, the FCAI welcomed this news from the government.

FCAI Chief Executive Tony Weber explained a newer motor vehicle fleet is always going to be better than one with cheap second-hand imports.

"The high level of competition is benefiting consumers, with a vast majority of models sold in Australia at a cheaper price than other right-hand drive markets," he said.

"On 2 August I released research supporting this. Further highlighting this, the most recent CommSec Car Affordability index shows that car prices in Australia are at their lowest since the index began in 1976."

The FCAI plans to continue talks with the government on this matter as well as providing its insight into the Motor Vehicle Standards Act Review.

The topic of vehicle ages is one that is discussed globally as different countries have taken various approaches to the matter. The average age of Australian cars is just below 10 years and this is much older than other countries such as the UK and the US.

Australia could also look at New Zealand for an example of what not to do. NZ relaxed its laws when its car industry shut down and now has an average fleet age of between 11 and 13 years.

These vehicles need more maintenance than newer models, are less safe and contribute to growing environmental problems like carbon emissions.

On the same page

However, this was one part of the Productivity Commission's report that the FCAI agreed was a good idea. The commission recommended that the Luxury Car Tax be removed.

This tax, added onto the other important costs such as registration and ctp insurance make owing a vehicle an expensive exercise.

According to the FCAI, the high Luxury Car Tax was designed to only apply to vehicles from Europe. However, in recent times, a Toyota customer could be paying more tax than a buyer of an Audi or a Porsche.

Toyota's executive director sales and marketing Tony Cramb said the tax is unfair as other luxury items such as jewellery or yachts are untouched.

"Australian motorists are already heavily taxed with GST, stamp duty and registration fees when buying a new car, as well as road tolls and a hefty tax on fuel," he said.

Mr Weber explained the tax puts some consumers off buying certain vehicles.

"This poorly designed tax distorts vehicle purchase decisions and adversely impacts safety and environmental outcomes," he stated.

"We welcome the Government's in principle support for this recommendation and we look forward to further consideration in the Government's Taxation White Paper."