ACCC shafts car buyers

AUSTRALIA’S car-buying public and the car industry were thrown into turmoil this week with car buyers no longer easily able to find the price of most new cars for sale.

It is not that the car companies don’t know the prices any more, it’s just that they are not sure they can tell buyers the prices without breaking the law.

New legislation that came into force this week says car prices have to be expressed as the total price a car buyer will pay and must include all charges including dealer delivery, registration costs, stamp duty and compulsory third party insurance.

But these prices vary throughout Australia. GoAuto has been told the price of just one model can vary by up to 26 pricing regions in terms of stamp duty, registration fees – even compulsory third party insurance by postcode – with further variations for private, business, primary producers and pensioners and in some cases the age and gender.

There could be hundreds of different prices for just one car. Then there’s the automatic version! Since national pricing clearly cannot reflect these factors in one simple price, most car companies have decided not to issue new-car prices.

Most car company web sites no longer provide prices for their cars. Some sites simply tell buyers to get prices from a dealer and other just say POA (price on application).

Some car companies have asked GoAuto to remove prices from its new model stories, car reviews and consumers aids like price comparison lists.



In one week, the role of the internet in empowering car buyers to make value judgements on the cars they are looking at buying has been swept aside.

The companies fear their marketing and PR managers will be prosecuted by a hard line ACCC for providing prices to the media that may no longer comply with the ACCC’s interpretation of the legislation. Breaches can involve criminal charges against individuals. So it is serious.

So car company public affairs managers now face the ludicrous situation where car-makers may be forced to announce new cars to the media without disclosing the prices.

Alternatively car-makers will have to supply the media with such huge and complex price lists that there will be insufficient room to publish the data, or the lists will be so complex the public will not use them.

This is exactly the opposite result for consumers than the government intended, and there a potentially serious threat to the strength of car demand which was showing signs of holding its own in the downturn.

So the government, via the ACCC, runs the risk of undermining new-car sales in Australia at a time when we are being warned by the prime minister that we are going through an “economic tsunami” and “the worst recession since the depression”.

By forcing car-makers to not disclose car prices, buyers entering the market will be unable to gather the information they need to make their judgements about what they can afford and what to buy. The industry’s experience is that nothing is more damaging to car industry sales than price confusion and there is nothing more likely to cause confusion than car buyers who cannot conveniently find out what cars cost.

The ACCC’s Graeme Samuel says the industry has had years to get ready.

But what he is not saying is that he ambushed the industry with just three weeks to go before the legislation became law by taking a stronger stance in the regulations than the government had indicated in discussions with the industry.

According to the FCAI, all the briefings it held with government departments in the lead up to the legislation led them to believe that the law would make provision for the car companies to issue indicative national pricing for the purpose of consumer comparisons.

But three weeks ago they found out that the ACCC wanted to apply the total price provisions to national prices for the purposes of media releases and consumer price list in spite of knowing the massive complexity involved.

The chief executive of the FCAI, Andrew McKellar, told GoAuto that “treasury had a different view on how the legislation would apply to car companies to the one taken by the ACCC”.

He said that it was never the intention that the new legislation should override the car companies’ ability to provide indicative national pricing that did not have to be broken down into geographic or local pricing.

“Their (ACCC) interpretation is quite distinct from all the discussion we have had with treasury officials and the minister’s staff in the lead-up to the passage of the legislation. We were quite comfortable about what the coverage of the legislation was, the degree of flexibility in it and its impact on manufacturers.

“No one in the industry has a problem with the legislation as it affects dealers. Dealers can arrive at an advertised price because they have all the information on all taxes and charges in their area that apply to the car.” What riles the industry is that it is being penalised for complexity that is not of its making.

Apart from dealer delivery charges that should be addressed within the industry, it is governments around Australia that are the problem because they all levy the different taxes and charges that create this crazy mosaic of multiple prices.

One solution might be that car dealers sell cars unregistered. New owners then hire a third party to register the car and attend to all the paperwork that the dealers currently take care of.

If the dealer is no longer responsible for charging for the element of the price that creates so much pricing complexity and confusion, then that myriad of pricing structures go out of the price and a reasonable national price of the car unregistered can be used by the industry for consumer comparisons.

It might cheese-off buyers, but that is possibly the best way to get the attention of politicians that a little less zeal by the regulator could help consumers and the industry.

No one has any argument with the intent of the price laws. Politicians and the public have long been concerned that the recommended retail price of a car did not reflect the end price because of the addition of fees that could add thousands of dollars to the final price.

But the ACCC effectively ambushed the industry with tougher interpretation of the legislation than even the minister intended and only gave the industry three weeks to digest the implications.

Plenty of notice? Given that car prices are no longer freely available for consumers, clearly three weeks was not enough.

This situation will make Australia a laughing stock. The only country in the world where you cannot get car prices on company web sites and in the media. What tosh.

Here we have serious economic issues confronting workers and business. We have government stimulus packages with depreciation incentives for businesses to buy vehicles to save jobs and inject activity into communities. Yet a maverick regulator takes it upon itself to go further than the parliament and create a situation where people cannot conveniently find and compare the cost of cars.

Frankly, the prime minister should step in and take charge to ensure car buyers stay in the market. It just needs some common sense to prevail and have the regulator work with the industry to broker an interpretation that gets national indicative pricing back into the realms of consumer research without penalising those who provide it.

Meanwhile, we watch the market pulse and hope that process does not take too long.

Industry ‘insulted’ by ACCC cartoons

THE Australian Competition and Consumer Commission appears to have had second thoughts about including “insulting” cartoons in copies of its published guidelines for motor vehicle price advertising.

The cartoons have been removed from recent copies of the report downloaded from the ACCC web site.

Car company top managers and legal advisers did a double take when reading the initial copies of the document which they say contained “childish” cartoons that made a mockery of the pricing issue.

They questioned the professionalism of the ACCC in its decision to add the cartoons to a serious report which, should it be misread, could end up with serious legal consequences for car company management at the behest of the ACCC.

The ACCC cartoons suggest the industry sees its customers as “suckers”. This and other tired clichés show that the ACCC is hopelessly out of touch with the commercial realities of the retail car industry.

The chief executive of the FCAI, Andrew McKellar, said the cartoons were inappropriate for a document that has a serious impact on the industry.

“These are guidelines put together so the people in the industry can comply with the (legislation) and they pepper the document with these little insulting cartoons,” he said.

Footnote: As a service to readers, GoAuto will continue to provide car prices published before the legislation took effect on Monday. Prices will be updated when the ACCC agrees that it is no longer illegal for car companies to provide indicative national pricing to the media.