Mike Stevens | May 28, 2009

THE AUTOMOTIVE TRADE, or more to the point, the automotive retail sales industry, is a dark business. Some people seem to put it on par with practicing necromancy.

How often do you hear a story that paints the process of buying a new car in a positive light? Not many people talk about the good experiences, most will only tell you about it when they’re not happy. But, like in any trade, there are decent staff and dealers out there; trust me, I’ve worked with them.

I guess it seems we all love to give car salespeople a hard time.

So how do you improve perceptions of the industry? Where do you even start? Is it the advertising? Is it the fine print? (The ACCC would seem to think so.) Or is it something about the TV-stereotype salesmen, you know, the comic-image ones adorned in gold chains and micro-fibre suits?

used_car_salesman_2

Having worked in that field myself, I know what it’s like on both ends.

For that reason, I have to comment on what the ACCC has cooked up to help the new and used car buyer - stepping in, it would appear, to rid the world of dodgy advertising and shonky deals.

And yes, on the face of it, the new ACCC ruling requiring that cars are advertised showing a ‘drive-away’ price should aid consumers in understanding exactly what the final costs will be with the purchase of a new or used car.

You would think so. That, after all, is what the ACCC wished to achieve.

And yes, it all sounds wonderful getting rid of the ‘hidden’ costs.

But there are problems with this ruling that have nothing to do with practices in the new car sales sector, and that have nothing to do with manufacturers’ policies, that make the ACCC ruling an unworkable mess.

The problem is that state-based taxes, statutory charges and levies in Australia vary from state to state. Stamp duty on a new car for instance can vary from between 2.5 percent to 6 percent of the purchase price, depending upon which State you live in. Registration charges and compulsory third party insurance also varies across borders.

And it is not just the across-border variances: these costs and charges can vary within states. In Victoria, there is a difference in registration costs from metro to rural areas; if you are a pensioner you pay less registration; and if you are a pensioner and live in NSW you don’t pay stamp duty.

Making sense of it across Australia is a nightmare.

I agree that a car’s advertised price should be shown only as a final or ‘drive away’ price, and agree that the practice of quoting an ‘RRP plus on-road costs’ in advertising should be abolished, but the solution is not as simple as the ACCC simply waving a magic wand. And worse, waving a magic wand and saying to manufacturers and dealers “this is the new ruling - comply with it or else!”

But that’s exactly what they have done.

holden-dealer

The result is that manufacturers have done the only sensible thing they can do: they have removed their recommended retail pricing schedules from their websites.

How can they advertise a price nationally, and even within a state, when there are so many variances at work?

So it is going to be harder – not easier - for ‘would be’ consumers to compare prices. More of them will be in the dark because no manufacturer will risk publishing a price that will be wrong depending upon where it that advertised price is seen geographically.

Buyers will now need to contact a dealer to get a clear picture of how much a particular car of a particular brand is going to cost them to get it out the door. How much harder – not easier – will this make things for buyers? It will be much harder drawing up a short list of potential purchases from the newspaper or websites.

Everyone in the industry is running scared for fear of falling foul of the new ACCC rulings (because the ACCC carries a very big stick).

At the end of the day, these new regulatory standards in advertising were not well thought out and brought in at the wrong time for an industry under stress.

Without a lot more thought, and without harmonisation across State borders, they will not work for car buyers nor for the industry.

It perhaps illustrates just how out of touch the ACCC is with the “practice of being in trade” – as opposed to Trade Practices – when such a poorly thought-out ruling can be applied in such a blanket way.

We’re all for openness and disclosure in vehicle pricing, but this needs a thorough rethink.

Click here to view the ACCC pricing manual for the motor vehicle industry.

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