Why Parallel Imports are a Good Thing for Dealers
Last Updated: : 6 hours ago
Chris Polites, Dealer Director at carsales.com ltd, looks at a few ways which parallel imports can actually help boost the dealer network.
Much has been made of the Federal Government’s announcement to ease import restrictions on new cars from 2018. Quite rightly, there has been a lot of noise from industry figures about how detrimental this change will be for car dealers and doom and gloom articles written on the topic since the change was announced earlier in the month.
I, on the other hand, believe that there is real opportunity here for Australia’s car dealers.
Let’s create a hypothetical scenario where a consumer in 2018 begins looking into importing a car from Japan or the UK on the premise that it will be cheaper to do so. Doing some homework will quickly reveal otherwise. A direct comparison between vehicles might reveal that on some models you may be able to save a couple of grand by purchasing a vehicle from overseas but digging a little deeper reveals the those savings quickly become redundant.
By the time you pay tax in the country you purchase from, packing and shipping fees, GST, import duty and on road costs once finally the vehicle arrives in Australia you’re looking at a hefty bill of extras on top of the vehicle purchase. Hell, if the car you choose to import is worth over $63,184 then you may have to bang the “luxury” car tax onto that as well.
In short, there really aren’t that many savings to be had for consumers looking at circumventing dealers in favour of parallel imports. Consumers are smart, there’s no way they won’t do their homework and quickly realise what I’m speaking about here.
There will be a few instances where a car will be available for purchase overseas cheaper than here at home, which leads us to the biggest guns in the Australian dealer arsenal; warranty, servicing, convenience and trust.
These are things that you can offer that consumers cannot get importing vehicles themselves as a part of the parallel imports scheme. Sure, they can go and purchase a warranty from a third party but that again adds to the ever growing bill of extras that is amounting as a part of this process.
Not only that, but capped price servicing is out the window for DIY importers, as is all other great extras that come along with buying from a dealer.
The points of convenience and trust aren’t as tangible as the former two, but are arguably more compelling. The new car buying journey is a long one and payment is the final step in a process of research, evaluation, testing and final decisions before rolling away in a shiny, new car. Or at least it should be.
Importing a vehicle means paying for it, then sitting around waiting for it to roll into the docks. That could take months! The convenience of being able to make a payment and drive off in a car is a very big tick in dealer’s favour. Don’t underestimate the power of instant gratification.
Added to that, you can also offer consumers the opportunity to come and have a look at the car (or one like it) before they purchase. I know I have never bought a car without a test drive and I highly doubt I’m alone in saying that.
I’ve saved trust for last because I think this is the biggest thing working in dealers favour. The government has already conceded that there is an element of ‘buyer beware’ in purchasing a parallel import. Two years out and they have already begun preparing for the inevitable circumstance of someone buying a lemon. There is no consumer protection for purchasing a parallel import.
You can offer guarantees against this ever happening.
It really is hard to see this announcement affecting dealers. There is simply too much going in favour of buying locally, which begs the question, what the hell is the government’s real plan here? If this plan is to reduce the cost of new cars then I think it will fail miserably. If the Federal Government want to lower the hurdles for Australians to purchase a new car, then maybe it’s high time they had a good look at the luxury car tax.
In this format, it’s hard to envision parallel imports having a detrimental effect on the dealership network. The process of importing a vehicle is cumbersome and time consuming, and the savings really just aren’t there. This move by the government could potentially open other policy doors. It will be interesting to see if this change is the prelude for something bigger.
For now though, parallel imports present the perfect opportunity to demonstrate how great their offering actually is. If anything, this move will help in strengthening the dealer network.