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Ken Gratton2 Sept 2014
NEWS

Parallel imports come at a cost

Government must consider complex issues before approving parallel imports, says Benz spokesman
Don't expect the Productivity Commission's review into the automotive industry to pave the way immediately for a sunlit paradise of deregulated parallel importation. 
Government first needs to assess the idea very carefully, looking for any and all pitfalls, argues David McCarthy, Senior Manager for Public Relations, Product and Corporate Communications at Mercedes-Benz Australia.
Parallel importation presents the government – and the consumer – with a basket of complex issues to be resolved, says McCarthy, who admits that Mercedes-Benz in Australia has a vested interest in the case of another person or business entity importing cars wearing the three-pointed star on the grille. 
"We are not afraid of competition. What we are afraid of... is that the consumer is not necessarily going to win with this. Now I know it's easy for us to say that, but we have some real concerns about... what system, if the government decides to allow some sort of parallel importing; what system will they allow?
"Who is going to certify the cars? 
"Does this mean that Australian Design Rules will effectively go by the wayside?  
"Who is going to check these cars when they come in? The New Zealand experience; they will tell you they have a robust system. I don't believe they do. If they can drive them off the boat they're [considered] right. 
"Our concern is [in] other right-hand drive markets the air conditioning is not configured for our climate, the nav is not configured, the fuel filler pipe may not be, the speedo may not be, the seatbelts may not be of the right type. 
"All of that can be fixed, but who's going to certify these cars?"
McCarthy feels it is imperative that grey import vehicles are brought in, processed and registered "without compromising the safety and the environmental standards that exist in this country currently."
Yet the government, he believes, has "no appetite for setting up a new bureaucracy" to formulate guidelines, implement legislation and enforce the applicable rules for parallel importers and vehicles shipped in this way. 
McCarthy provided, as one example of parallel importation, an individual buying a near-new S-Class in the UK and shipping it to Australia. Once the car was in international waters, an 'international' two-year warranty would apply. This is less than the three-year warranty provided by Mercedes-Benz on locally-delivered cars in Australia. 
"Who is going to support that vehicle? The individual, who brings it in – they will expect the manufacturer to provide warranty support. Warranty is funded locally... it forms part of the price of the car."
The head office in Stuttgart insists that Mercedes-Benz Australia factors a warranty into the negotiating price of each car sold here. The local arm would honour the international warranty, but McCarthy explains that the international warranty may not cover the car in the same depth as the local warranty, let alone the term of coverage. 
There are other considerations too. 
"People need to understand... if you front up to a dealership in the UK and you say: 'I want to buy that S-Class', you can.
"And you can export it. And you can even apply for a refund of the VAT [UK equivalent of the GST]. But what you've then got to do is find a transporting mechanism – so put it in a container... ship it here – [do] a lot of paperwork... Luxury Car Tax to pay, there would be an import duty fee, GST....
"You're going to be faced with a long wait and a lot of paperwork. And that car is not going to be classified as 'locally certified'. 
"All that can potentially be changed; it really depends how much time you have, how much aggravation you want, and how much money it's going to save."
And that's just to get the car approved by the feds. Having it registered for the road means making the acquaintance of a new tier of bureaucracy – at state level. 
"Depending on how they change the regulations, you've then got to satisfy the registration authority that the vehicle complies with the design rules. There's a lot of little trips and steps along the way. It could well be worthwhile, but all of that comes at a cost," McCarthy reiterated. One example of that is the recent confusion arising out of Victoria's decision to go it alone with mandatory stability control systems. Cars that met Australian Design Rule requirements were being sold in other states, but couldn't be legally sold or transferred in Victoria. McCarthy is in favour of harmonising ADRs with other accepted standards applied elsewhere. 
Costs converge in parallel importing
New car pricing in Australia has been the source of much contention over the years. And nobody sits on the fence either. 
In the age of the Internet, it has quickly come to be understood that Australians pay more for cars of similar specification than other nationalities do – particularly Americans. 
The reasons given by the automotive industry are many and varied. They range from protecting resale/consumer sentiment, or different interest rates payable on finance for vehicles being shipped further than almost any other destination in the developed world, right through to rough-road/warm-climate 'durable' specifications in right-hand drive. Even the cost of paying an average wage to Australian workers at the end of the supply chain is a significant factor in the final cost of your new car. 
Ultimately, the difference between pricing in Australia and the USA can be summed up thus: Unique market with its own economic hurdles – scale, logistics and regulation. 
David McCarthy cites the A 45 AMG – over $12,000 less in Australia than in the UK – as one example from the local range to support the view we're not paying through the nose, at least for cars priced below $100,000. But he does admit that while the local market can compare favourably with other markets around the world, pricing in Australia will never match the pricing consumers have come to expect in the US. 
"It's a volume game. If we were selling 10 times more C-Classes here than we were, then of course the price would be better; we would be able to get them at a much better price," McCarthy said.  
But the relative pricing of new cars in different markets begs one obvious question; do you buy a low-kilometre demonstrator through the factory-approved sales channel? Or seek out the services of a canny business operator with a line in importing near-new Mercedes from Britain. 
Let the arguments begin...
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Written byKen Gratton
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