‘Deregulation a door-opener’: Importers have been plotting their move for two years. Photo: Reuters
The private companies that ship cars out of Japan and New Zealand have a nickname for Australia. It’s “Treasure Island”. The reference is not just to the size of the country’s car industry, but also the fact that, for this well-organised group of buccaneers, Australia is ripe for plundering.
Last year Australians bought more than 1.15 million new vehicles, the highest number on record. Those cars cost in excess of $20 billion, or almost 9 per cent of all consumer spending, and added more than $6.5 billion to government coffers through taxes, stamp duty and other charges.
It has always made sense for us to try and crack the Aussie market. When you decided to shut down your manufacturing industry, that opened the door.
Australia’s love affair with cars drives a massive industry, employing more than 330,000 people, but in February the major players were blindsided by the Turnbull government.
‘It has always made sense for us to try and crack the Aussie market. When you decided to shut down your manufacturing industry, that opened the door.’
Despite private briefings to the contrary, Federal Minister for Major Projects Paul Fletcher announced that Australians would be able to privately import cars from 2018 – the same year local car manufacturing will end – as long as the cars involved are no more than 12 months old, have no more than 500 kilometres on the odometer and are from Japan or Britain.
The head of the Federal Chamber of Automotive Industries, Tony Weber, responded as expected, slamming that decision and claiming it impacted everyone from “Australian consumers” to “border security and quarantine”.
It was a shotgun approach from the FCAI’s chief executive. Unfortunately for the motor industry’s peak body, they had already been taken out by a sniper.
Fairfax Media can reveal the changes to the law announced in February gained traction in Canberra after a major “astro-turfing” campaign by a group of multi-national car importers based in New Zealand, along with lobbying firm GRA-Cosway.
In New Zealand, restrictions on parallel imports were removed in the late 1980s. More than two-thirds of the cars now sold in New Zealand are “grey market” vehicles imported by brokers, the majority of which are second-hand.
The net result across the ditch has been threefold. Cheaper cars, an ageing of the national fleet, and windfall profits for the companies that trade in grey-market and second-hand vehicles.
“We have always seen Australia as Treasure Island,” said one industry player from New Zealand, who did not wish to be named. “Our cars are shipped past Brisbane and Melbourne to get here. It has always made sense for us to try and crack the Aussie market. When you decided to shut down your manufacturing industry, that opened the door.”
To that end, a number of large companies have been plotting for a little more than two years. Together, they helped create and fund a body called the Australian Imported Motor Vehicles Importers Association (AIMVIA), which purports to represent niche Australian car importers.
Documents obtained by Fairfax Media reveal that AIMVIA was established under the direct instruction of its new New Zealand-based parent, an organisation called the Imported Motor Vehicles Importers Association (IMVIA).
A 2014 letter signed by IMVIA’s co-chairmen, Graeme Macdonald and Lloyd Wilson, could not be more blunt.
“It is no secret that the potential for significant business opportunities for established New Zealand operations into a deregulated Australian marketplace are enormous,” they wrote.
“With the support of the wider industry here in New Zealand looking to this future, the [IMVIA] executive made the decision to engage with our Australian counterparts and seek to assist in forming a similar association to the IMVIA across the Tasman. This decision has been made with both commercial and community interests at heart.”
It didn’t take long for the plan to be implemented.
AIMVIA was registered in NSW on June 14, 2014. Just six days later, David Vinsen, the chief executive of IMVIA, was appointed its inaugural chief executive of AIMVIA. To this day, the board of AIMVIA is chaired by a representative from across the Tasman.
A key financial backer of AIMVIA is JEVIC Group, which stands for “Japan Export Vehicle Inspection Centre”.
JEVIC is a multi-national company that performs pre-shipment inspections on cars exported from Japan. It has offices in Britain, South Africa, Singapore, New Zealand and Kenya, and has been eying expansion into Australia for years.
The second major sponsor of AIMVIA is a company called Autohub, a multi-national company that specialises in the shipping of cars from Britain and Japan.
Together, the two companies control much of New Zealand’s trade in parallel imports, and are key sponsors of IMVIA.
“Yes, they would have been two of our members who were the most interested in expanding into Australia,” Mr Vinsen told BusinessDay. “As far as we are concerned, there has been latent corruption at the highest level in the car industry in Australia.
“There has been an unhealthy and corrupt relationship between the major car companies and successive governments, to stop competition to the local manufacturers. Now they are going, we want the [Australian] market to open up to competition.”
One of AIMVIA’s first moves was to hire national lobbyist firm GRA-Cosway, to run a campaign to help dismantle the country’s car importation laws and open the market to parallel imports.
Mr Vinsen said he had played a key role in hiring GRA-Cosway.
“They were recommended by our New Zealand lobbyists,” he said. “They have been involved in lobbying, in arranging meetings with ministers and with key people in relevant departments.”
The lobbying campaign worked. GRA-Cosway’s contract with AIMVIA was extended last October, and by February the new laws were announced.
But confusion reigns about how the importation of grey market cars to Australia will work, especially when it comes to the thorny issue of repairs and recalls.
Australian Competition and Consumer Commission commissioner Roger Featherston said at the Australian Auto Aftermarket Conference in Melbourne on Thursday that businesses, as well as individuals, may be able to import grey market cars..
“If the scheme permits Australian businesses to import vehicles for individual consumers, protections may be more readily available than if individual consumers are required to purchase their vehicle directly from an overseas entity that may have no connection with Australia,” he said.
“New Zealand’s economy has benefited from allowing the personal importation of vehicles: consumers have access to a greater range of cars and, in some cases cheaper cars; new businesses have emerged to assist consumers with the importation process; and existing businesses have grown. We would expect to see similar benefits here in Australia.”
It sounds like he is reading from the AIMVIA script. But the ACCC’s message conflicts with the minister.
Tony Weber pointed that out on Friday, saying the ACCC had contradicted Paul Fletcher, who has maintained only individuals, not companies, will be able to import grey market cars.
And the view of Mr Fletcher? That was even less clear, especially on the thorny issue of vehicle recalls, saying the government was “consulting with the car industry” about the best way to manage that.
“Certainly the process will involve greater responsibility for consumers than if they purchase their vehicle directly from a car dealer in Australia. [But] as is the case with any new policy, we have said consistently that there is a good deal of detail still to be worked through.”
It was enough to have one frustrated car industry boss heading for the door early, ahead of the long weekend.
“Let me get this right, we have policy made on the fly, no consultation with industry, and departments are contradicting the minister. I thought we had voted Kevin Rudd out,” he said. “My greatest fear is that this will be the pink batts scandal of the Liberal Party. It’s all going to end badly.”