THE VEHICLE DEALER’S NEWS SOURCE VOLUME 1 ISSUE 10 MAY 2015 Budget tax cuts to benefit dealers, but no LCT change E xecutive director of the Australian Automotive Dealer Association (AADA), Ian Field has welcomed the Federal budget tax deduction for assets worth $20,000. The Budget however, did not not scrap the luxury car tax (LCT) which the automotive industry has been calling to be scrapped for more than a decade. The key announcement from treasurer Joe Hockey as part of a number of tax benefits for small business is that small businesses will be able to immediately claim a tax deduction for assets purchased up to $20,000 in value. This means that any small business owner or a tradie for example will be able to purchase a new or used vehicle and claim the $20,000 before the June 30 end of financial year cut off. Field told AutoTalk that small business, mostly tradies will benefit from this particular tax deduction on assets up to $20,000 and says: “In the next month and a half a lot of utes and commercial vans will be bought. It’s a great outcome which we didn’t see coming.” Field also noted that the luxury car tax (LCT) not being scrapped in the budget wouldn’t make any difference to the marketplace. In Field’s view: “If it is truly meant to be a LCT, then it should be moved to where luxury cars really start and that is north of $100,000. “You can’t sell a car at $54,000 plus GST and consider that car a luxury item Ian Field – there are plenty of utes and commercial vehicles sold at that price and you have to pay the LCT on them,” he adds. “Essentially a car that costs over $54,000 before GST, for which you need to pay the LCT, is hardly a luxury level in motor vehicles. It’s just another way of creating an increased sales tax on vehicles over a certain price. Its should not be named a luxury car tax, it’s a tax on buying cars once you get over a particular price,” Field told AutoTalk. Excluding new taxes, axing the LCT would make expensive vehicles far more affordable – something for which luxury vehicle brands such as Mercedes Benz, and some not considered to be ‘luxury brands’, such as Toyota, have INSIDE Dealership benchmarks revealed $11m dealership for Gladstone Different views on imports Hacking cars too easy? 3 5 7 13 7 13 lobbied for some time. The Federal Chamber of Automotive Industries (FCAI) has been lobbying the government to scrap the LCT for some time too. FCAI chief executive, Tony Weber supported the Productivity Commission’s report last year that the LCT be removed. “Taxes and other government charges make up around 20% of the price of new cars in Australia. Fixing those tax arrangements, including the poorly-designed LCT, is a better and more targeted way of addressing car affordability than a change that will only ultimately hurt consumers,” Weber noted last month. The 2014 PC report noted that the 33% LCT, which from July 1 2015, applies to the component of a vehicle’s price up to $61,884 (or $75,375 if they consume less than 7.0L/100km), accounted for around $400 million in revenue for the government but “was arbitrary in its effect”. Continued on page 2 FOUNDATION SPONSORS AutoTalk acknowledges the support of our foundation sponsors: BUDGET TAX CUTS TO BENEFIT DEALERS, BUT NO LCT CHANGE Continued from page 1 When it was introduced, LCT was intended to apply to high-priced cars from Europe, but today Toyota customers pay more in LCT than do buyers of Audi, BMW, Mercedes-Benz or Porsche. Under the new regime, the LCT not only applies to accessories and the delivery fee, but also is now applied to any factory bonus or incentive discount to the dealer as well. VACC also welcomed treasurer Joe Hockey’s support for small business, but also criticised the fact that the LCT was not scrapped as part of key tax cuts announced in the budget. The treasurer announced a series of tax incentives to assist small business and tax measures to improve Victoria’s GST revenue. However, VACC’s pre-Budget call to the treasurer to remove the LCT was overlooked, a measure which in VACC’s view would improve new vehicle affordability. Hockey also announced that companies with up to $2 million turnover will receive a lower company tax rate reduced from 30% to 28.5%, while unincorporated businesses will receive a 5% tax deduction of up to $1000. VACC, however, notes that it would have liked the treasurer to provide more details on the proposal to introduce GST on online purchases, an issue VACC’s retail members would welcome, due to the fact that many of the members miss out, as buyers source their advice, but purchase online from 2 | AUTOTALK.COM.AU | MAY 2015 overseas, and avoid GST. “As the treasurer promised, this was a budget for small businesses who want to innovate and grow. VACC members provide valuable services for the community and industry and they welcome this support,” VACC executive director, Geoff Gwilym says. Luxury Car Tax concession not enough In a small concession, the government will allow museums to acquire cars for public display to be exempt from the tax on luxury cars. VACC notes: “We are disappointed, but not surprised, that the focus on LCT stopped there.” “Ditching the LCT is particularly relevant at a time when the government is considering the deregulation of new car imports in the name of improving vehicle affordability. We urge the government to reconsider relaxing current new car import restrictions and for it to realise that cutting the LCT will do the very thing it is trying to achieve, and that is make new vehicles more affordable for Australians,” Gwilym says. The AADA noted in March this year: “A number of inherent flaws in the LCT’s policy structure have created complicated and unfair operating conditions for new car dealers in Australia. “For example, the tax’s discriminatory nature has been a particular pain point for the industry. The LCT does not apply to other luxury goods such as yachts, jewellery, watches, private aircraft and artwork.” NEWSTALK AutoTalk Magazine and autotalk.com.au are published by Auto Media Group. Phone: 1800 125 620 ABN: 37 51360 734 2015 Deloitte motor industry services dealership benchmarks results revealed BY MAX PICHON JOURNALIST Max Pichon +61 403 932 864 [email protected] MANAGING EDITOR Richard Edwards 021 556 655 [email protected] PUBLISHER Vern Whitehead 021 831 153 [email protected] SALES MANAGER Dale Stevenson [email protected] OPERATIONS MANAGER Deborah Baxter [email protected] Auto Media Group Limited makes every endeavour to ensure information contained in this publication is accurate, however we are not liable for any losses or issues resulting from its use. autotalk.com.au autotalk.co.nz dieseltalk.co.nz carandsuv.co.nz CAR & SUV T he 2015 Deloitte Motor Industry Services’ ‘dealership benchmarks’ for the Australian car market has been announced which shows some key statistics on the top 30% of dealers in Australia. The survey reveals that Customer relationship management (CRM) remains a key area of influence on dealerships. Benchmarks are split into three market categories: the Volume market, the Prestige market and the Luxury market. This segmentation reflects the different dealer business models used to operate and generate a profit at the dealership level, making the benchmarks relevant for all. Interestingly, 2014 was a year that challenged the business models typically characterising each segment with shifts in market volumes and grosses impacting on dealer profitability. It should be noted that while the business models in each segment are intrinsically impacted by the brands that dealers carry, the benchmarks are not a commentary on the positioning or esteem of those brands. Data uploaded to the eProfitFocus system of more than 850 dealers in the Australian market for the 12 months leading up to the benchmark period is taken into consideration. The performances of the top 30% of dealers are isolated and taken as the reference point for the benchmarks. This raw data is then adjusted to reflect contemporary industry and market circumstances, as well as long-held best practices. CRM benchmarks These CRM benchmarks are a measure of ‘Best Practices’ as identified in the Australian motor industry. The figures represent the benchmark of what dealers need to aim for when implementing successful CRM operations. When it comes to generating leads, the largest amount are achieved through the dealership website (31%) for new cars and (10%) for used cars. Phone ins (website phone number) is second with new cars (21%) and used cars (5%) followed by walk-ins (website solicited) for new cars (25%) and 7% for used cars. The biggest change is seen for online lead providers with new cars with 12% while used cars with 70% of their leads. Phone-ins and walk-ins from traditional media led to only 6% of leads for new cars and 5% for used cars. Marketing and advertising costs are the same for volume and prestige benchmark dealers at $238 per new car, while luxury dealers spend $400 per new car. Average dealers in the volume and prestige sectors spent slightly more $240 and $243, while luxury dealers spent $345. CRM and sales How effective is your sales team at converting new market leads, referrals and repeat customers into sales? The benchmark survey calculated the sales efficiency for top staff and average sales staff in terms of conversion ratios and found that of 100% of total leads/enquiries top staff convert appointments in 92% of cases while average staff convert them 70% of the time. Test drives show that 73% of top staff convert leads into test drives while average staff convert 45% of leads into test drives. When it comes to offers, top staff convert them in 58% of cases, while average staff convert them in 33% of cases. Finally, sales are converted in 35% of cases for top staff, compared to 22% for average staff, and F&I contracts conversions are 15% for top staff compared to 6% of average staff. CRM and service The survey asked, Once acquired, how do you retain customers in service? The benchmark study has found that when comparing metro and rural retention rates for handover/followup service, the retention rate for rural dealers is higher in the first year at 93%, while for metro dealers it’s at 91%. In the 2nd year it drops to 87% for rural compared to 82% for metro, for the third year rural rates drop to 77%, while metro drops to 68%, and in year four rural drops to 58% compared to 49% for metro dealers, Finally in the fifth year retention rates reach 49% for rural while metro dealers reach 40%. Continued on page 4 AUTOTALK.COM.AU | MAY 2015 | 3 NEWSTALK 2015 Deloitte motor industry services dealership benchmarks results revealed Continued from page 3 The big 4 CRM measures 1. Customer orientation The survey stats show that metro dealers get more conquest customers (unsolicited) at 62% compared to 48% for rural dealers, however, rural dealers have a higher rate of referral customers with 22% compared to 13% for metro customers. Rural dealers also get more repeat customers with 30% compared to 25% at metro dealers. 2. Customer profitability New vehicle customer profitability as a % of conquest business at the national level shows that conquest customers (unsolicited) breaks even at 100%, while referral customers reach 142%, and repeat customers are at 193%. 3. Dealership advocacy The dealership’s ability to create advocate customers at the national level shows that dealers achieve this mainly through positive word of mouth at 80%, while indifferent customers take up 18%, and negative word of mouth is only 2%. 4. Customers’ perception of effort in dealing with dealership At the national level customers who perceive ‘low levels’ of effort totaled a high number of 82%, this remains a worrying trend for dealerships and one which dealers will need to address in order to change the public’s perception of car dealers. Additionally, customers who perceive ‘neutral levels’ of dealer effort total 11%, and customers who perceive ‘high levels’ of effort reached only 7%. 1. Volume dealer market benchmarks Dealers who fall into the volume market classification tend to be dealers focusing on the volume side of the volume/margin equation. The benchmark study reveals that it takes a volume dealer on average 24 says in the month to break-even and to generate net profit. The current dealer structure for a volume dealer consists of new cars (36%), used cars (18%), parts (13%), and service (33%). Front end (vehicle operations) make up 54% of a dealership and back end (fixed operations) make up 46% of dealership structure. In terms of staff profitability, gross per employee per month is $10,800, while net profit per employee per month is $2700. Vehicle operations Vehicle operations for new and used volume dealers reveal that gross profit per unit sold is $2700 for new car dealers and $2600 for used volume dealers. Days supply for new car dealers is 55–65 days, compared to 65–75 for used dealers. Stock turns p.a. are 6–7 for new versus 5–6 for used car dealers. Finally, gross ROI as a % of cost of sales x stock is 65% for new versus 95% for used car volume dealers. Finance and insurance (F&I) Finance penetration totaled 35–39% for new cars while used car dealers totaled 33–37% – finance income per contract totals $2300–$2500 for new versus $2600–$2800 for used car dealers. 4 | AUTOTALK.COM.AU | MAY 2015 Finance per retail unit sold is $890 for new volume dealers, versus $945 for used cars, and insurance per retail unit sold is $200 for new versus $250 for used car dealers. F&I selling gross per vehicle retailed is $1020. Fixed operations The benchmark study reveals the sales mix for a volume dealership’s operations with retail/counter taking up 5%, wholesale/trade 24%, workshop 28%, warranty 18%, and internal taking up 25% of the sales mix. Operational benchmarks The survey also reveals that a volume dealer’s days’ supply is between 45–55, stock turns p.a. at 7–8, monthly sales per employee totaling $70,300, while monthly gross per employee is $16,900. 2. Prestige dealer market benchmarks Dealers who fall into the prestige market classification tend to be dealers focusing on finding a balance in the volume/margin equation. The dealership benchmark survey finds that a prestige dealer like the volume dealer takes 24 days to break even and makes a net profit as% of sales of 3.7–4%. The make up of prestige dealer is new cars (39%), used (14%), parts (13%), and service (34%). In addition, front end (vehicle operations) make up 53%, while back end (fixed operations) make up 47% of the dealer. Finance and insurance income takes up 23% of total gross, and ‘other’ income and incentives take up 12% of total gross profit. Gross profit per employee per month totals $11,200, and net profit per employee per month is $3100 at a prestige dealer. Vehicle operations A prestige dealer makes gross per unit of $2800 for every new car sold versus $2500 for used cars. Meanwhile, days supply is 55–65 for new versus 60–70 for used dealers. Stock turns p.a. totals 6–7 for new car versus 5–6 for used. Gross ROI as a % of cost of sales x stock turns p.a. is 65% for new versus 90% for used car. In addition, units per salesperson sold per month reach 14 for new versus 13 for used car, and gross per salesperson per month is $39,200 for each new car sold versus $32,500 for used car prestige dealers. Finance and insurance (F&I) Finance penetration for the prestige dealer market totaled 32–36% for new cars versus 31–35% for used cars, while finance income per contract reached $2500–2700 for new cars, which was the same for used cars. Finance per retail unit sold is $885 in new cars versus $860 for used cars, and insurance per retail unit sold is $180 in new cars versus $200 in used cars. Vehicles retailed per F&I staff/mth reached between 50–60, while salaries and commissions as a % of income totalled 20%. Finally, F&I income per dept employee/mth was $64,200. Fixed operations The prestige dealer parts department sales mix is split between the wholesale/ trade department and the Continued on page 5 NEWSTALK Reef City Motors to build $11M superstore R eef City Motors is spending $11 million to build a car superstore in Gladstone, bringing construction and extra dealership staff jobs to the town. Once completed it will house the largest display of car brands in Gladstone. Although some business has been dismal since the downturn, local dealerships have been going through renovations and expansions, during what they say is the best time to prepare for the next growth stage. “Reef City Motors has outgrown its Toolooa St premises,” principal dealer and co-owner Chris Zagami says. On top of the current seven brands sold at the dealership, the dealership aims to add another three by the time the 20,000sq mt superstore opens in November. “Gladstone’s always been a growth region and whilst it’s not at the moment, in the medium to long-term outlook it will grow at a rapid pace,” Zagami told the Daily Mercury. “We’re going well now and so we will establish ourselves now for the future.” Zagami said he was trying to help create a “motor-vehicle destination”. “The key element is a main road front and while it’s not Hanson or Dawson Hwy, it’s significant for passing traffic travelling between the port and residential areas,” Zagami told the Daily Mercury. The business will employ a technician and apprentice for each brand, with an estimated 10 extra permanent staff coming onto the books with the expansion. Reef City Motors, located 550 km north of Brisbane, has been running for more than 25 years. Zagami has copartnered in its ownership since 2007. 2015 Deloitte motor industry services dealership benchmarks results revealed Continued from page 4 internal department with 23%, while the workshop department takes up 32%. The warranty department takes up 17% of sales and retail/counter takes up 5% of the sales mix. Operational benchmarks Average days supply for a prestige dealer is 55–65 days and stock turns p.a. total 6–7. Monthly sales per employee totals $87,000 and monthly gross per employee is $20,900. Finally, sales per salary is $19 on average. 3. Luxury dealer market benchmarks Dealers who fall into the luxury market classification tend to be dealers focusing on finding a balance in the volume/margin equation. Net profit as % of sales for a luxury dealer is 3.8–4.1%, while the amount of days for a luxury dealer- ship to break even are 23, based on a full month. A luxury dealership structure is broken up into new cars (44% ), used cars (11%), parts (13%), and service (32%). Front end (vehicle operations) represent 55% of a luxury dealer while back end (fixed operations) total 45%. Finance and insurance income totals 19% of total gross, while ‘other’ income represents 10% of total gross. Gross profit per employee per month is $12,000, and net profit per employee per month totals $3400. Vehicle operations A luxury dealer makes gross profit per unit of $4700 for new cars versus $2700 for used cars. Days supply are between 60–70 for new cars, and also 60–70 for used cars, while stock turns p.a. are 5–6 for new cars and also 5–6 for used cars. Gross ROI as a % of cost of sales x stock turns p.a is 70% for new cars and 80% for used cars. Additionally, units per salesperson per month total 11 for new versus 12 for used cars. Gross per salesperson per month for a luxury car dealer are $51,700 for new cars and $32,400 for a used car. Finance and insurance (F&I) Luxury dealers in 2014 saw finance penetration of 33–37% for new cars versus 32–36% for old cars, but finance income per contract totaled $2200–$2400 for new versus $2250–$2450 for used cars. Finance per retail unit sold was $805 for new and $800 for used cars, while insurance per retail unit sold totaled $180 versus $200 for used cars. Vehicles retailed per F&I staff/mth reached between 50–60, while salaries and commissions as a % of income totaled 20%. F&I income per dept employee/ mth reached $59,800. Fixed operations The luxury dealer parts department sales mix is split between the wholesale/trade department and the warranty department with 22% each, while the workshop department takes up 37%. The internal department takes up 15% of sales and retail/counter takes up 4% of the sales mix. Operational benchmarks On average, days supply for a luxury dealer is 50– 60, while stock turns p.a. are 6–7. Monthly sales per employee total $87,000, while monthly gross per employee reached $20,900. AUTOTALK.COM.AU | MAY 2015 | 5 E L C I VEH G N I P P I SH S T R E P X E JAPAN TO AUSTRALIA FASTEST IN THE BUSINESS Direct port calls to Brisbane, Sydney and Melbourne. All-inclusive shipping packages available. 30 YEARS INDUSTRY EXPERIENCE GERRY CLAUDATOS // PHONE: 02 8103 4075 // [email protected] // dolphinshipping.com.au PEOPLETALK NEWSTALK One topic, two different views: Parallel imports Changing new and used car import laws filled with risk: BDO Automotive An expert in the automotive sector believes that the Australian Government’s proposal to allow new and used car imports is nonsensical from the consumer point of view mainly due to how competitive the automotive market already is. But a new vehicle importer thinks that the government’s proposed changes should be welcomed by the higher end car brands as it would attract more work for their repair and servicing sections. BDO Automotive partner, Mark Ward, told AutoTalk: “New and used car dealers will be adversely affected if the relaxation of import regulations was to proceed, but more importantly it will be the consumer who will be exposed to all number of risks. Why would the government put both the industry and the public at risk for what will be a negligible benefit, if any.” The government’s proposed changes would allow private car buyers to import new or used cars directly from overseas sellers, however the Federal Government has indicated it is unlikely to take the same approach with used cars. “Australian consumers already have the benefit of a very highly competitive market, with greater than 60 brands available at prices comparable to other developed countries, according to price comparison research conducted by the Federal Chamber of Automotive In- dustries. I don’t understand the motivation for a change,” Ward told AutoTalk. The other key issue for Ward is, how consumers will benefit when it comes to new car warranties, fixed price servicing arrangements and product safety recalls. Ward notes: “How can the Government guarantee safety with respect to imported vehicles which presumably will not be subject Mark Ward to manufacturer safety recalls and the fixed process servicing arrangements which are already a feature of many new brands sold through the dealer network.” “Are the imported vehicles fit for purpose? How are the public protected from unscrupulous individuals looking to take advantage of relaxed rules? These are just some of the questions for government.” Lower profits for new car dealers, and used car dealers to be impacted In regard to the motor dealers themselves, Ward questions why the government would contemplate the risk that any relaxation might have on jobs and financial returns. “Often overlooked is the fact that Australian dealers employ approximately 68,000 people, have a significant investment in facilities and training, and make a significant contribution to their local com- munities. Despite all of that, motor dealers operate on a financial return which is both diminishing and barely acceptable relative to the risk of operating those businesses.” Ward’s strong view is that any deregulation of import laws will not provide any upside to any of the stakeholders, including the government, and to that extent, why would any relaxation be contemplated. “The government is very mistaken if they believe that any relaxation will enhance competition for the benefit of the consumer, they simply need to make themselves aware of the facts”. Ultimately Ward suggests that what the auto sector might get is a scenario where people who would usually buy a used car locally will instead buy a new car from overseas. Ward also thinks that there is more clarification needed about what constitutes a new car. “Minister Jaime Briggs considers a new car is one that is less than 4000kms and less than 12 months old, but really if a car has even 1000kms, then it’s a used car already,” he told AutoTalk. Ward notes that new car sales are at the best level in years but that it has come at the expense of profit. “We have overall these car brands all looking to get a reasonable or improved market share – volume comes at the expense of profit. We are seeing increasing new car sales and it’s a leading economic indicator, but other economic indicators are going backwards,” he says. In Ward’s view the majority of the industry is against the relaxation of car regulations. “There is a minority who are operating a used car yard and who import cars. But they don’t have to deal with the high level of standards and rules that franchise dealerships are currently subjected to.” When AutoTalk asks what the overall feeling is coming from car dealerships on the import issue, Ward notes: “Dealers are not overly concerned for themselves, because they know the cars they are selling now are very competitive when it comes to price. Where they are concerned is when it comes to new and used imported car owners demanding that local dealers offer the same conditions that they offer local buyers.” “For example, if someone buys a Toyota from Japan, that consumer could have an expectation that dealer will honour the warranty, fixed price servicing, handle recalls, but local dealers won’t be able to do that and that will reflect badly on dealerships. Customers will have the notion that the local dealer network will look after their car and that won’t be the case.” “We are going to see more consolidation in the industry with bigger dealers taking over smaller dealers. Continued on page 8 AUTOTALK.COM.AU | MAY 2015 | 7 NEWSTALK Continued from page 7 In effect it is the smaller and regional dealers struggling to remain viable because they just don’t have the volumes and the throughput to support a whole organisation. You are seeing a lot more consolidation in the last 6-12 months in the industry and that will continue to be so,” he concludes. Vehicle import changes will be for the better, but tax will be key barrier: Importer Shogun Conversions logistics and engineering manager, Herman Urriola, spoke to AutoTalk on his view on the new car imports debate which would see the SEVS be revamped in order to allow more choices for car importers and private buyers but cautions that tax regulation will play a key role in how successful or not the scheme is. Urriola also thinks that consumers will benefit if the government frees up imports of second-hand vehicles, while introducing new changes to the Australian Design Rule (ADR) regulations. As the Australian government prepares to release a regulatory impact state- NEWSTALK ment into changes to the cheaper vehicles have also Motor Vehicle Standards been supported by the ProAct, specialist car importers ductivity Commission in its are hoping the government review of the act last year, will resist pressure from as-well as from the Australthe automotive industry – ian Automobile Association, represented by the Federal and the Australian CompeChamber of Automotive tition & Consumer CommisIndustries – and relax sion. regulations on new and used If the changes were to vehicles entering Australia. be greenlit then it would Shogun Conversions one increase the volume of of the country’s biggest sellused vehicles from righters, converters and importhand-drive markets, and this ers of American would stimulate muscle cars into competition, Australia. On aversomething that age they import would be ‘a boom around 500 cars for business’, acper year, which cording to Urriola. include, Corvettes, He notes: Dodge Rams, Ford “RAWS is lookMustangs and ing at modified Chevrolet Camaand or more Herman Urriola ros, F250s, GMCs, relaxed SEVS Silverados and Tundr’s. entry list. The government They are also one of the will open SEVS up and aloldest accredited members low some sort of parallel of the Registered Automoimport for cars up to five tive Workshop Scheme years old with a restriction (RAWS). on kilometres to keep the According to Urriola, the Australian fleet new. There’s government would most not going to be an open likely move to allow imports slather approach – it will of vehicles up to five years be funnelled through the old for models not imported RAWS system so new and new by the original manuused car importers will still facturer. need to achieve some sort Changes to the act to of compliance.” allow consumers access to Urriola notes that de- 8 | AUTOTALK.COM.AU | MAY 2015 regulating the system will be a positive move by the government as customers would be free to buy cheaper second-hand cars and a greater variety of new models. In regards to the OEM manufacturers he has a different view: “High volume importers are going to suffer a lot with the new changes, but that isn’t a bad thing.” Urriola also reveals to AutoTalk that at the last meeting between RAWS, industry organisations and assistant minister for infrastructure Jaime Briggs in Canberra, it was suggested that car manufacturers should cover warranties and recalls worldwide. In this regard Urriola says: “I don’t think that OEM’s will be in a position to knock back work for warranty and/or service repair recall. “Recently we have seem Cummins starting to do repair work on new Dodge Rams as a service, because they realise it’s a big market – if they don’t service them someone else will. It just would not make sense business-wise for some of the high end luxury brands such as Ferrari, Mercedes or Porsche to knock back serContinued on page 9 NEWSTALK ONE TOPIC, TWO DIFFERENT VIEWS: PARALLEL IMPORTS Continued from page 8 vice and repairs on new cars being imported,” he adds. For Urriola, the amount of taxes paid and how they are regulated will be the biggest hurdle for the industry. “It all comes back to the amount of taxes being imposed on low volume importers. The luxury car tax (LCT) is a ridiculous tax and should be axed,” he says. “We currently offer C7 Corvette’s for which we need to charge locally $220,000 but the price of that same car in the US is US$70,000 (A$100,000). “We charge $45,000 for conversion and compliance, that’s roughly 1500 hours of labour. We may end up with a gross profit of $5000 to $7000, on a $70,000 USD vehicle while the ATO pulls in $70,000 AUD in taxes – 5% duty ($7500), GST ($15,800) LCT overall is $37,500, and a further stamp duty of $9650. “If the LCT and other taxes were null and void we would be selling the C7 Corvette for around $180,000 as opposed to the current $220,000 – more people would buy it,” Urriola notes. But if you do the same sums on the Z06 corvette, car cost $110,000 USD, duty and GST work out to $30k, LCT ends up at $55k, Stamp duty $13k, ends up pushing the drive away figure to $295k, an overall gain to the ATO of $100k, so as it turns out you pay just as much in taxes as you do for the car in whichever scenario.” Urriola’s advice for used car import private buyers and businesses is that the change that he thinks will be for the best both for the importer and for the average Jo Blow who wants to buy a second hand Maserati, as long as it’s fairly new. “The changes will be in the right direction, but won’t be the free-for-all that the government has stated. Cars will still need to meet ADRs’. ADR’s will be brought in line to mimic some of the other alternate standards such as FMVSS, EEC, ECE etc. It will make it easier for the ADR’s to be compliant against vehicles manufactured with other known international standards.” In regards to the FCAI and the MTA who have called on the government to scrap any deregulation of new and car imports Urriola notes: “They are only protecting industries they are affiliated with, and those new car importers that have been doing very well for the last few years, they will have more competition”. In Urriola’s view “there is no local market to protect anymore.” “If Jo Blo or a small dealer can do a better job than Ferrari can when it comes to producing and importing a car - and as long as they abide by taxes and don’t commit tax fraud - then I don’t see why the government wouldn’t deregulate the market. If they police the little guys as much as they do the big guys then the industry is safe,” he concludes. March proves a winner for carsales A ustralia’s leading automotive classified site carsales.com.au continued to build on its position as the most preferred brand for Australian new and used car buyers in March, delivering record unique audience figure of 1.39 million visitors. March saw carsales’ unique audience jump to a new record, increasing 22.6% on February, and 2.9% since the same time last year, to 1.39 million. This puts carsales 157% ahead of fourth-placed CarsGuide, and well ahead of both Drive and Gumtree Automotive. Total monthly visits to carsales topped 13 million. The average session times in the last quarter for carsales remain the highest in the automotive classifieds market at 5.12 minutes, ahead of eBay subsidiary Gumtree Automotive, Drive and CarsGuide. Carsales’ average time on site per person remains strong at one hour ten minutes compared to CarsGuide’s ten minutes and Drive’s 14 minutes. Commenting on March’s strong numbers, carsales chief executive Greg Roebuck says: “We continue to focus on the customer and give them what they want. We not only give them access to the most cars available, but more importantly, consumers understand that the site works for them whether they are buying or selling. We sell a car every minute and customers know that the site is the one to turn to for results.” The latest audience results build on recent research that shows for car buyers, carsales is the most preferred brand for buying a new or used car, 12 times more than CarsGuide, 7 times more than Drive and 5 times more than Gumtree. In terms of researching new and used cars, 30% of those intending to buy a car prefer to use carsales to research and read about cars, 24% prefer car manufacturer sites, 9% prefer Drive, 5% prefer CarsGuide, 3% prefer Gumtree and 0.8% prefer Car Advice. “A total of 71% of the carsales audience is not on our closest competitor, indicating that all of our continued investment in our solutions continues to work and improve the user experience and journey,” Roebuck adds. AUTOTALK.COM.AU | MAY 2015 | 9 Max Pichon NEWSTALK AUSSIE TALK nior AutoTalk’s se ax M t journalis back Pichon looks ’s th on m st on la rvice daily news se lian for the Austra er al de vehicle industry. April 1 Eclipx Group to go live on ASX after $254M IPO Fleet management and vehicle leasing specialist, Eclipx Group, is preparing to make its debut on the Australian Securities Exchange next month after attracting strong investor demand during its institutional bookbuild for the $518 million soon-to-be-listed company. Eclipx supplies, finances and manages vehicles on behalf of corporate customers and consumers in Australia, and corporate and SME customers in New Zealand. Eclipx lodged its prospectus with the Australian Securities and Investments Commision (ASIC) for its $254 million initial public offering (IPO) on March 26, 2015. Eclipx is expected to list on the ASX on April 22, 2015. Hyundai unveils Australia’s first hydrogen-powered car Australia’s first hydrogen powered car, the Hyundai ix35 fuel cell, has been unveiled today by Federal industry and science minister, Ian Macfarlane. The minister also officially opened Australia’s only hydrogen vehicle refueling station. The Hyundai ix35 fuel cell, hydrogen-powered, zeroemissions fuel cell electric vehicle (FCEV), built in Ulsan, South Korea, arrived in Australia in June 2014. It is the first hydrogen-powered car to be permanently based in Australia and it has been DIARY undergoing operational trials in the lead up to today’s announcement. New car buying intender numbers on upward curve The number of potential new car buyers in Australia continues to rise, with the latest figures from Roy Morgan Research revealing that 2.37 million people are planning to buy a new car in the next four years, an additional 129,000 units since last month, and up on the same time last year. Short term intention has also risen. Motorists intending to buy a new car in the next 12 months now number 598,000 – an increase from 537,000 last month and slightly more than the same time last year. April 2 Harper Review rules in favour of used and parallel imports The Competition Policy Review – led by emeritus professor Ian Harper – has recommended that restrictions on used and parallel imports be relaxed in favour of giving consumers choice, in its final report on Australia’s competition rules, the first of its kind in 20 years. The review found that restrictions should be immediately removed, making it easier for individuals or retailers to import certain products without needing to go through an authorised distributor or IP owner. This would see a dramatic drop in the price of some goods, including second-hand cars. 10 | AUTOTALK.COM.AU | MAY 2015 AHG makes $5M acquisition of two dealerships Automotive Holdings Group (AHG) has bought the Paceway Mitsubishi dealership at Osborne Park, along with a Brisbane dealership, for a total of $5 million. Managing director Bronte Howson describes the acquisitions as further opportunities to grow the group’s portfolio of brands in Queensland, while further strengthening its dominant position in WA. “The Brisbane acquisition increases our Queensland dealership portfolio and is located close to our existing Aspley retail automotive hub, which houses Holden, HSV, Mitsubishi, Hyundai and Suzuki dealerships,” Howson told the West Australian. April 8 Jaguar Land Rover dealerships recognised Jaguar Land Rover dealerships were honoured when Matthew Wiesner, managing director of Jaguar Land Rover Australia, presented the 2014 Jaguar and 2014 Land Rover ‘dealer of the year’ awards. Wiesner comments about the winners: “The dealers awarded are exemplary Jaguar and Land Rover dealers who have consistently achieved outstanding results in all key areas. We are delighted to have them as our business partners as we continue to grow the Jaguar and Land Rover businesses in Australia.” International truck returns to Australia Navistar Auspac has announced that the International truck brand will make its return to the Australian market in 2015. Product plans, distribution details and other specific announcements will be made at the Brisbane Truck Show, May 14-17, 2015. “Bringing International back to the Australian market is a key part of our growth goals for Australia, and demonstrates our commitment to this important market,” says Tim Quinlan, Navistar Auspac managing director. Toyota announces 5-star awards for dealerships Toyota Australia has acknowledged its top performing dealerships by announcing its coveted 5-Star awards for guest experience. A total of 19 dealerships each for Queensland and New South Wales have been recognised, South Australia had 11 recognitions. Victoria had the most recognitions with 27 dealers, Tasmania had 2, ACT 1, and Western Australia had 9 dealerships recognised. Toyota certified used vehicles scheme hits 10,000 mark Toyota’s ‘certified used vehicles’ program has gone from strength to strength with 10,000 buyers having now bought cars – backed by Toyota – after the vehicles have passed inspection and background checks. Janine Wiles of Forest Lake in Queensland became the Toyota ‘certified used vehicles’ program’s 10,000th buyer when she purchased a 2012 RAV4 Cruiser from Mackay Toyota. Nissan to slash marketing investment and focus on ‘digital users’ Nissan is planning to slash its global marketing investment by half through a digital transformation strategy. The Japanese automotive brand has deployed Adobe Marketing Cloud across the Nissan-Renault Alliance, including its Nissan, Infiniti and Datsun brands, to deliver a consistent customer experiContinued on page 11 NEWSTALK Continued from page 10 ence and brand globally. The brand aims to “optimise cost efficiency through data analytics and asset management while sustaining brand image”. April 9 ACCC greenlight’s VQIRT lease to operate automotive terminal The Australian Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition by Victoria Quay International RoRo Terminal (VQIRT) of a long-term lease to develop and operate the automotive and RoRo terminal at the Port of Fremantle, after accepting a court-enforceable undertaking. The undertaking seeks to address the ACCC’s competition concerns should VQIRT be successful in its bid. Following an ‘expression of interest’ (EOI) from parties interested in developing and operating a dedicated automotive and Ro-Ro terminal under a long-term lease on Victoria Quay, Victoria Quay International RoRo Terminal and AAT have been shortlisted to proceed to the ‘request for proposal’ phase, which closes on April 24, 2015. Tesla introduces Model S 70D for $102K The latest Model S fromTesla has been unveiled today and will be powered by an allwheel drive (AWD) dual motor which will offer 0-100 km/h acceleration in 5.4 secs, and a 225 km/h top speed. Starting at $102,400 RRP plus luxury car tax, on-road costs and stamp duty, Model S 70D includes dual motor AWD technology, a NEDCrated 440 km of range, and automatic keyless entry among other features. April 10 EAI awarded rights to Maserati distribution in South Africa Australia-based European Automotive Imports (EAI), owned by New Zealand businessman Neville Crichton, has received the rights to distribute the products and services of Maserati in South Africa from 1 May 2015. “We are delighted to be able to announce the appointment of EAI to handle Maserati in South Africa,” says Umberto Cini, managing director of Maserati general overseas markets. April 13 New look Nissan Micra on sale for under $20K Nissan will unveil its new-look 2015 Nissan Micra, later this month at dealerships which will be go on sale at a drive- away price of 15,735 for the ST manual. The facelift brings Nissan’s ‘V-Motion’ front grille to the Micra along with new bonnet, guards, headlights and wheels. Inside the Micra, a new centre cluster, instrumentation and seat trim are among the changes. The sportier look also brings changes in specification, with Micra now available in two grades, ST and Ti. The Micra ST-L grade has been removed to simplify the range. April 14 Hyundai iCare program recognised with Innovation Excellence award Hyundai’s iCare customer care program has won a Canstar Blue Award for Innovation Excellence. It is the first time the consumer-focused Canstar Blue Awards have included awards for Innovation Excellence in the Automotive category. Hyundai’s iCare was the only customer care program awarded in the new category. VACC targets quality training and apprenticeships for Victorian auto sector VACC has launched a multimillion dollar donation program designed to support vocational trainers that deliver quality automotive training All the Auto Industry HOT NEWS every day as it happens on www.autotalk.com.au Subscribe online for FREE twice weekly updates direct to your email that meets industry needs. VACC with the support of a diverse group of vehicle manufacturers has developed the Automotive Industry Donation Program of parts, components and vehicles to assist training organisations that meet industry standards. April 15 Customers always come first at Mackay Toyota A Queensland dealership has positioned itself as one one of the top Toyota dealerships in the country after it took out a number of awards earlier this month, including the Gold Toyota Fleet Management Rural Dealer of the Year Award. Mackay Toyota also won accolades for individual departments including a bronze marketing award, bronze customer experience award, bronze service award and a bronze business management award. April 16 New Mitsubishi Triton receives 5 stars The Australasian New Car Assessment Program (ANCAP) has awarded all variants of the new-generation Mitsubishi Triton a maximum five-star safety rating in advance of its Australian debut this month. This 5 star ANCAP safety rating applies to all Triton variants all cab styles, engines and driven wheels Govt favors new car import rule, but says no to used cars A Senate hearing into the future of the automotive industry in Australia was held on Wednesday in which the Australian Government today decided to allow consumers to import new vehicles into the country. Assistant Infrastructure Continued on page 12 AUTOTALK.COM.AU | MAY 2015 | 11 NEWSTALK Continued from page 11 Minister Jamie Briggs today revealed that the government will consider allowing personal imports of overseas vehicles, raising fears from industry the move will cause a knock-on effect to dealerships. The new regulations would mean greater access to the international vehicle market by 2018 when car manufacturing winds up in Australia. Import lobby: Government has not gone far enough The import-backing Australian Imported Motor Vehicle Industry Association say the government has not done enough for the market with its decision to not allow imported used vehicles, and restricting parallel imports to personal purchases. FCAI: Import decision ‘irresponsible’ The government has indicated it is likely to support the personal import of new vehicles into Australia – but remains negative to opening up the market to used vehicles. Assistant minister for infrastructure Jamie Briggs this morning announced the position, following a year of consultation on the Motor Vehicle Standards Act. “As part of this process the personal importation of new cars has been a key consideration, particularly given the end of light vehicle manufacturing in Australia in 2017–18,” Briggs said in his statement. April 20 Llewellyn Motors opens all-new used car dealership Llewellyn Motors has opened its fourth dealership over the weekend in the heart of the Ipswich CBD in Queensland. The business opened its newest site, which will be entirely dedicated to used cars, in a prime spot that fronts onto Brisbane St, Limestone St and Gordon St. Llewellyn Motors used car sales manager Dan Pace said the centre would specialise in 4WDs, SUVs, commercial vehicles and performance cars. business. engine bay fire. AAAA releases Code of Practice with six guiding principles April 28 April 21 The Australian Automotive Aftermarket Association (AAAA) has unveiled its Choice of Repair Code of Practce at the AAAA Conference and Expo held last week. AAAA executive director Stuart Charity unveiled the organisation’s C ode of Practice at the Friday afternoon seminar which touched on the key issue of telematics in the industry. The Code of Practice is based on the following agreed principles: Customers move towards online purchasing over dealership visits A survey has revealed that carbuyers are becoming increasingly open to buying a car online without ever visiting a dealership, according to leading consultancy Accenture. However the survey also shows that consumers are less likely to go through the entire buying process online perhaps because they can foresee potential problems and weaknesses. Townsville to get Porsche showroom in July April 24 NSW Court finds dodgy dealer guilty of 13 offences More Porsches may soon be seen on Townsville roads with a local dealership striking up a partnership with Porsche. Motoco Group Townsville in Northern Queensland, will unveil the Porsche Centre in July, and is already fielding customer queries from interested North Queenslanders. The company is in the process of fitting out a showroom on Bowen Rd, across the street from its existing Audi showroom. A Burwood used-car dealer, Nader Soliman trading as Prestige Australian Fleet Pty Ltd, has been ordered to pay $16,142 in fines and legal fees for breaches of the Motor Dealers Act 1974. The Parramatta Local Court found Soliman and his company, Prestige Australian Fleet, guilty of committing 13 offences against the Act, including two instances of selling vehicles without the required roadworthy certificates as well as fabricating roadworthy certification. April 23 April 27 Honda announces top dealerships Product recalls for Holden, Mercedes Benz, Renault and Foton Honda has announced three winners for their 2014 Honda Dealer Excellence Awards. The award criteria covers all areas of the business including sales, service, parts and customer satisfaction. Dave Potter Honda of Glenelg in South Australia, Southside Honda of Woolloongabba in Queensland and Blue Ribbon Honda of Yamanto in Queensland were recognised for excellence across all aspects of their 12 | AUTOTALK.COM.AU | MAY 2015 Product Safety Recalls Australia has announced a number of recalls for four different brands. GM Holden, Mercedes Benz, Renault and Foton have all been affected by different types of product recalls within the last week. The Holden Colorado and Holden Colorado 7 have been recalled due to an electrical fault that could result in an AAT revealed as other competitor for Port of Fremantle auto lease The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the proposed acquisition by Australian Amalgamated Terminals Pty Ltd (AAT) of a long-term lease to develop and operate the automotive and RoRo Terminal at the Port of Fremantle, after accepting a court-enforceable undertaking. The undertaking seeks to address the vertical competition concerns that arise should AAT be successful in its bid. End of an era as Toyota Camry goes overseas Toyota Australia has today unveiled the last model Toyota Camry to be built at its Altona manufacturing plant. Along with the facelift Aurion, the new-look Camry and Camry Hybrid will be in production until the company stops manufacturing at the end of 2017. Having built more than 3.2 million Toyota vehicles locally since 1963, this marks the end of an era in the Australian automotive industry. During a special ceremony for employees and key stakeholders, Toyota Australia president Dave Buttner vowed that the plant’s last car would be the best global car. AHG reaches 100 dealers with Mazda purchase Automotive Holdings Group has announced it has been granted a franchise to establish a new Mazda dealership in the Brisbane suburb of Browns Plains. The latest acquisition of the new Browns Plains Mazda will be AHG’s 100th dealership across Australia and New Zealand. NEWSTALK Hacking your ‘computer on wheels’ too easy C ar manufacturers are being left red faced with the latest explosion of car thefts of late model vehicles. The move away from a key lock to an electronic security system may cost OEM’s and insurance companies millions of dollars in claims due to a simple security work around by criminals. Cars have relied on onboard computers for some three decades, but for most of that time, the circuits only managed low-level components. But that has now changed. Today, electronic control units (ECUs) control or finely tune a wide array of critical functions, including steering, acceleration, braking, and dashboard displays. More importantly, as one Queensland-based university researcher has revealed, on-board components such as CD players, Bluetooth for hands-free calls, and telematics units for road-side services make it possible for an attacker to remotely execute malicious code. In September last year, professor Andry Rakotonirainy, from QUT’s Centre for Accident Research & Road Safety (CARRS) commented: “The security protection on cars is virtually non-existent, it is at a level of protection that a desktop computer system had in the 1980s – the basic security requirements such as authentication, confidentiality and integrity are not strong.” Rakotonirainy has researched the security sys- tems of existing fleet, future autonomous and connected cars and has found there is little protection against hacking, as vehicles become computers on wheels. “What this means is that as vehicles become more and more connected and autonomous, with the ability to communicate to other vehicles and infrastructure through wireless networks, the threat of hacking increases putting people’s safety and security at risk,” he adds. He says newer cars can have anywhere between 30 and 120 ECU’S built into them to control functions like brakes and steering. “If one, or all of them, were hacked there was a risk a driver could lose control of their car. Once you control the brain of the car you can do absolutely anything,” he says. Rakotonirainy thinks it is vital for car makers, government and road safety experts to turn their attention to this global security threat. “We need to be analysing the types of risk that that these intelligent vehicles are facing and work to provide a secure, reliable and trusted protection system,” he notes. “A vehicle’s communication security over wireless networks cannot be an afterthought and needs to be comprehensively considered at the early stages of design and deployment of these high-tech systems from the hardware, software, user and policy point of view.” Hacking cars not a new thing, its our job: Brisbane Locksmith It has been revealed that criminals with a laptop, access to the Internet, and a electronic transponder can easily gain access to a large number of late model vehicles. The hackers are can stand next to your car and simply open a locked car without any key simply by opening the door handle. This assertion is made by John Magee of 24 Hour Locksmith in Brisbane who notes that hacking a cars electronic security system is nothing new. He says: “Locksmiths have been hacking car security systems for years. How do you think Continued on page 14 AUTOTALK.COM.AU | MAY 2015 | 13 NEWSTALK Continued from page 13 we are able to create a new key and electronic transponder when the keys have been lost?.” “Car electronic security systems have never been secure,” Magee adds. Magee’s reference echoes Rakotonirainy’s view that just about all cars can have their electronic security systems bypassed by a smart hacker. Modern cars no longer need an actual metal key. They rely entirely on an electronic code or transponder system. “For a locksmith to make a key to a car they not only had to cut the mechanical key, they had to be able to recode or reproduce the electronic security system. How do you think that happened? Yes, it was because once you could bypass one particular car model, you could bypass them all,” Magee explains. According to Magee this reliance on just one system makes cars vulnerable to simple attacks. A car that has a mechanical key and an electronic immobiliser is far more secure then just relying on an immobiliser alone. “The reliance on a proximity system was flawed from the start,” Magee adds. The proximity security systems used by OEM’s seem to be the major source of the breakdown in integrity. “As technology gets better, we’re seeing overall numbers of vehicles going down but those that are stolen by professionals are staying the same and in some instances going up.” Hackers with a high powered transmitter can read the key code and transmit it to the car with a special transmitting device. Magee notes that they don’t even have to be near the car for this device to work. “They may be able to drive down the street and test a large number of cars with these transmitting devices. They are only targeting the latest model cars, as older cars are still secured with a physical key,” he adds. The affect of these car thefts is being felt by insurance companies around the world. Paying out on an insurance claim when there is no sign of forced entry can be a problem for the owners of stolen cars. The best way to protect your car according to Magee: “Keep it in a locked garage or have a secondary locking device fitted to the car. This is really a problem the manufacturers need to rectify so they can make cars more secure in the future.” Traditional car break-ins still the norm, but for how long? Despite the concerns about Hacking into late model cars Mark Borlace from motoring organisation RAA in South Australia told 891 ABC Adelaide: “Most vehicle thefts are still by traditional methods such as breaking windows or beating door locks.” “The most commonly stolen cars are in the 12-15 years old age range,” Borlace says, pointing out thieves often were keen to sell off such vehicles for spare parts which were no longer in production. He said thieves still used car keys when they were available. “As technology gets better, we’re seeing overall numbers of vehicles going down but those that are stolen by professionals are staying the same and in some instances going up,” he adds. “The professionals are using even the simplest methods, unattended keys in service stations, from house break-ins, etc. We think one in four house breaks could be accessing car keys. Car dealerships are able to recode vehicle systems if drivers have lost their keys or fobs, and Borlace admitted this gave thieves a possible avenue, too. Interestingly, Borlace suggests that drivers keep their keyless fob in the freezer, for example. “The cold is not the issue, it’s the fact that it’s a big aluminium or steel box,” he says. “It’s supposed to have the effect of what is called a Faraday cage, which is put around something to shield it from radio frequencies,” he explains. Most recently Victoria and NSW police revealed that car hacking is starting to happen in Australia. Victoria Police confirmed to Fairfax Media last month that it was aware of instances where devices have been used to illegally enter locked cars in Victoria, which has led to valuables being stolen. “While these activities are not occurring on a widespread scale in Victoria, police will continue to monitor the issue,” a spokeswoman told Fairfax Media. NSW Police would not confirm instances but said criminals were becoming “increasingly tech-savvy” with car break-ins. “We urge vehicle owners to take every possible precaution to secure and protect their property,” a NSW Police spokeswoman told Fairfax Media. All the Auto Industry HOT NEWS every day as it happens on www.autotalk.com.au Subscribe online for FREE twice weekly updates direct to your email 14 | AUTOTALK.COM.AU | MAY 2015 NEWSTALK AAAA releases Code of Practice T he Australian Automotive Aftermarket Association (AAAA) has unveiled its Choice of Repairer Code of Practce at the AAAA Conference and Expo held last week. AAAA executive director Stuart Charity unveiled the organisation’s code of practice at the Friday afternoon seminar which touched on the key issue of telematics in the industry. The code of practice is based on the following agreed principles: • Consumers should be able to choose who maintains and/or repairs their motor vehicle and; • Independent repairers should be able to access all information required for the diagnosis, body repair, servicing, inspection, periodic monitoring and reinitialising of the vehicle in line with the service and repair information that manufacturers provide to their authorised dealerships. In his speech, Charity acknowledged the positive advances of technology, especially on safety and infotainment in cars, but he also noted that as cars increasingly become ‘computers on wheels’ the automotive industry will find it much harder to service or repair a vehicle and get access to key information on telematics-enabled cars. The absence of an adequate regulatory framework in Australia to protect competition in the vehicle repair and service sector has meant that it was not clear that vehicle manufacturers and importers were obliged to make technical and diagnostic information available to repairers outside their authorised dealer networks. This created a situation where independent aftermarket repairers have relied on the goodwill of the manufacturer to obtain critical information to complete the repair. Not surprisingly, many repairers find that the process to access technical information is difficult and confusing. In releasing the AAAA’s Code of Practice Charity noted that the automotive aftermarket industry code of practice will be based on the following six principles: 1. We will ask for the data and repair information that we need to service and repair our customers’ vehicles; 2. We will pay a fair price for this data and information; 3. We will formally complain when the data is not provided, is difficult to access or priced unreasonably; 4. We will explain to our customers the truth about vehicle servicing and warranties; 5. We will provide transparent information on the source of the parts that we use to service and repair vehicles, and; 6. We acknowledge the Stuart Charity importance of ongoing training to ensure the sector is proficient and efficient. In relation to the first principle, the AAAA notes: “The repairer should be able to access all information required for the diagnosis, body repair, servicing, inspection, periodic monitoring, and reinitialising of the vehicle, in line with the service and repair information manufacturers provide their authorised dealers and repairers. “We will be meeting with and working closely with these data providers and scan tool companies to carefully monitor that information is made available for the Australian market. At this stage our commitment as an industry is to expect that the data will be made available, to continue to request this data for a fair and reasonable price and to make representation when this does not occur,” says the AAAA code of practice. In relation to the second principle, the AAAA has noted that the signatory parties to the agreement will form a steering committee to monitor the operation of the agreement. The phrase ‘fair and reasonable terms’ will be tested over the next 12 months. From the AAAA perspective these are the issues that we will take into consideration when interpreting if the price for data and information is ‘fair and reasonable’: Manufacturers should provide the data and information on the same terms as that provided to the dealership, i.e. the net cost to the dealers should be the benchmark for the price charged to the independent repairers. There should not be any considerable difference in the prices charged by manufacturers for similar information in Australia and overseas. Prices should be affordable for the independent repair industry. In regards to the the third principle AAAA notes: “The operation of the data sharing agreement will be overseen by a steering committee comprising one representative of each of the signatory parties; Federal Chamber of Automotive Industries, Australian Automotive Dealer Association, Australian Automobile Association, Australian Automotive Aftermarket Association, and the Australian Motor Industry Federation. Formal dispute resolution processes will be developed by the heads of agreement steering committee over the next 12 months. In the meantime, AAAA will gather feedback on the operation of the code and any complaints relating to the provision of repair data in order to monitor how the Agreement is working in practice. Most importantly, AAAA has declared: “If after 12 months, widespread issues of lack of accessibility continue to occur in our industry, we will be advocating that the Australian government implement a mandatory code of practice to be monitored by the Australian Competition and Consumer Commission (ACCC).” For the fourth principle the AAAA has made it clear that consumers are in most circumstances ‘confused about the differences between the consumer guarantees, warranties against defects and extended warranties.’ “This is especially the case when Continued on page 16 AUTOTALK.COM.AU | MAY 2015 | 15 NEWSTALK AAAA RELEASES CODE OF PRACTICE Continued from page 15 car dealers and manufacturers make broad statements that consumers will “void their warranties” or similar if they go to an independent repairer, for example, a repairer who is not affiliated with the manufacturer or part of the manufacturer’s network. “Any suggestion by car manufacturers or dealers that vehicles need to be serviced at an authorised dealer to maintain the owner’s consumer guarantee rights is not correct,” AAAA notes. In its fifth principle the AAAA notes; “The consumer is entitled to full information regarding the maintenance and repair of their vehicle.” According to the AAAA: “Consumers must be made aware, by their nominated repairer, of whether the part/s to be used in the mechanical and/ or body repair and/or maintenance of their motor vehicle is: genuine (OEM recommended) or non-genuine (sourced from an independent manufacture/supplier); fit-for-purpose; compatible with the operating systems of the recipient vehicle; and compliant with all regulatory requirements, including provisions of the Australian Consumer Law.” In this regard, Charity noted in his seminar speech that “the term ‘genuine parts’ is a marketing tool by the car makers.” And adds: “Generally the vehicle manufacturers do not make replacement parts. These parts are usually manufactured by third party component suppliers with a car company brand on the box.” “The terms ‘genuine’ and ‘non genuine’ are not particularly transparent and do not provide good information to the consumer on the source of these parts,” Charity says. The AAAA notes that the sixth principle is as important as the other principles as it relates to quality training of staff in the automotive industry. AAAA notes: “There is a recognition that while dissemination of service and repair information is critical, the industry also acknowledges the impor- tance of ongoing repairer training to ensure that the sector is proficient and efficient.” “There are a range of independent training providers delivering training and education in vehicle systems, modules and new technologies. We encourage and support the independent repair industry to access training opportunities to maintain proficiency and to keep skills and expertise up to date and consistent with the vehicle technologies in modern vehicles,” AAAA notes. The Federal Chamber of Automotive Industries which represents vehicle manufacturers and importers will be issuing it’s code of conduct in the coming weeks to explain to the industry how this service and repair information will be shared. As part of the heads of agreement, all signatories are required to develop a code of practice or enabling documents to enact the principles of the agreement. Fewer road deaths but transparency needed on sharing uniform data T he peak national motoring body, the Australian Automobile Association (AAA), has released new analysis revealing Western Australia, South Australia and Tasmania are falling behind other States when it comes to reducing road deaths. On the positive side the report titled, Benchmarking the Performance of the National Road Safety Strategy 2011-2020, which is issued quarterly by the AAA, shows Australia is on track to achieve the government’s stated road safety target of a 30% reduction in deaths throughout the decade to 2020. There has also been a 3.5% reduction in the national road toll in the 12 months to March 2015, compared to the preceding year. “There has been a welcome reduction in the number of road deaths in the first three months of the year with 13 fewer lives lost compared to the previous quarter,” AAA chief executive 16 | AUTOTALK.COM.AU | MAY 2015 Michael Bradley says. “It is encouraging the three largest states of New South Wales, Victoria and Queensland are all recording the type of reductions necessary to achieve the road safety target,” Bradley adds. The positive developments for the Eastern states however, were undone Continued on page 17 NEWSTALK Fewer road deaths but transparency needed on sharing uniform data Continued from page 16 by the poor performance of Western Australia, South Australia and Tasmania, all of which are rated as red on AAA’s traffic light rating system, meaning they have fatality rates above the NRSS target. Analysis of the different road user groups shows there was a 25% reduction in the number of cycling fatalities on our roads throughout the same period. And while this is a step in the right direction, cyclists remain the only road user group rated as red on the AAA traffic light rating system. “Although cyclist deaths have been reduced by 25% they have been given a red rating because the trend is not on track to meet the 2020 target,” AAA’s director – government relations & communications James Goodwin told AutoTalk. The opposite is the case with passenger deaths which are increasing, however, they were given a Green rating as the category is currently on track to meet the 2020 target. For Goodwin, the key to having safer roads is a systems-based approach. “There is not one isolated solution. We need safer cars, safer roads and safer road users,” he says. He also notes that ANCAP is playing an important role in making cars safer and notes: “Consumer awareness of ANCAP crash ratings is growing and the AAA believes the program continues to encourage the automotive industry to improve vehicle safety. “Safer vehicles on our roads, and the publics ability to recognise and compare the safety of different models, are key factors in reducing Australia’s road toll.” Ultimately, for Goodwin, the results are somewhat of a mixed bag as he believes the overall national result is encouraging, but at the same time is concerned that the results of some states are masking the poorer performance of others. “If all jurisdictions achieved the same fatality rate per 100,000 population as New South Wales, there would have been 193 fewer deaths on our roads in the past 12 months,” Goodwin explains. The AAA report notes that while things are heading in the right direction, the biggest question mark is still around the notion of not being able to consistently or accurately quantify the number of serious injuries associated with road crashes. “Unless jurisdictions commit to developing and sharing uniform data, we will not be able to start monitoring the effectiveness of safety measures undertaken to address the estimated 32,000 serious road crash injuries sustained in Australia each year,” Bradley concludes. AUTOTALK.COM.AU | MAY 2015 | 17 NEWSTALK Being prepared for multi-device usage W e’re almost half way through 2015 and business for many dealerships will start ramping up for the end of financial year. With an upcoming influx of buyers expected, let me start this month’s column by asking you a couple of questions. Firstly, how ready is your dealership to experience yet another change in the way consumers behave online? And secondly, has your virtual showroom been built up in such a way it readily accommodates for viewing on almost every modern device available? The uptake of tablets, in conjunction with the continued growth and reliance on smart phone usage, is significantly changing the way consumers ‘behave’ in the online environment. Access to information is now easy, it’s simple to navigate, and it delivers the information they need almost instantaneously. The reason I ask you these key questions is because every dealer, whether big or small, franchise or independent, should be looking into how their online business is evolving, ensuring every potential buyer can have a positive experience with them. Today, it’s not enough to just have a mobile site… tick! Today, we live in a multi-device world where new technologies are no longer an option; they are now an ongoing consumer expectation. Not having a mobile site will significantly damage your traffic. Google recently changed its search formula so that if a website is not mobile friendly, it will not feature in the rankings. I had a meeting with a dealer group in Sydney last week and was blown away by the level of multi-device usage in the room; with one manager particularly using his smart phone, iPad and laptop, all in the space of 30 minutes and all for different purposes. The group themselves are big advocates for technology, supplying smart phone and tablets to all salespeople and managers, which enables them to access their Autogate account, dealer management system, dealer website 18 | AUTOTALK.COM.AU | MAY 2015 The mobile market, although robust with users, is really a hard market to crack from an app and re-engagement perspective. For example, one major auto destination has now withdrawn its app from market and other major media sites are continuing to struggle with functionality in this environment. Again, and customer database; all while on the it’s great to have one… tick! But once a move. And the best part is the greater user has downloaded it, are they comefficiency and understanding between ing back to use it again? buyer and seller, they’re talking the Our team work tirelessly to ensure same language! all of our apps (carsales, motoring, From a Carsales perspective, we see bikesales, boatsales etc.) are able 56% of our traffic coming from a mobile to continuously meet the needs of device each month, however if we consumers for functionality, speed, looked at this number just three years content and ongoing evolution - our ago, it would be a very different result. carsales.com.au app was even awarded As such, this growing level of interacthe 2014 ‘Best mobile expanded sertion with our business has been the vice or application’! Now, the reason driving force (and key success factor) we invest so heavily in this multibehind every new product or retail tool device space is simple: we know that’s we deliver to market. These days, our where over half of our users are surfing from. By enriching the user’s journey online with Carsales, it will in turn By Chris Polites, dealer engage more potential buyers to view director, carsales.com.au and enquire on dealer stock. The more [email protected] potential buyers, the more opportunity our dealers have to sell cars. So, let’s bring this multi-device condevelopment teams will no longer build versation back to basics in dealer-land. something without first considering the The common scenario will be this… I’m impact of multi-device usage. sitting on my couch watching televiWe may often be referred to as a sion and your dealer ad comes on. At ‘tech’ company; however we are first the same time I’m also responding to and foremost consumers, which is work emails on my laptop or iPad. If I significantly important here. If our own was interested in buying a car from you, staff see barriers to online experience, what do you think I would do next, pick then so will every other potential buyer up the phone to call you? Hell no, it’s out there. This is why your dealer11.30pm! ship, your salespeople and your virtual What I will be doing however is showroom, must be constantly evolving picking up my phone to search for around the changes in online behaviour. your dealer website. How EASY will it It’s no longer a matter of ‘if’, but ‘when’. be for me to find you? Because even Just last month, the Apple Watch though you strategically put your web was released for pre-order. Now, with address in big letters on my television, I over 100 app and web developers in can confidently say I’ll most likely have the building, you can imagine the flurry missed it, including my wife as she will we had here at Carsales! This was folhave been so pre-occupied with Inslowed by much thought, planning and tagram. So then I begin searching for mapping of how our team will be able your inventory online, will I find you? to accommodate the new technology This is the journey your ‘average Joe’ and how online consumers will start consumer will take during a night on to change again, in yet another new the couch… mobile environment. As it is, users alIn closing, if I can give you one piece ready consume information seamlessly of advice when it comes to the world of between desktop, tablet and mobile. multi-device usage and online conHowever, now with the addition of sumer behaviour it’s this… BE PREPARED the Apple Watch, we could start to see FOR A CHANGE. Those Apple Watch a serious new platform that will become people will soon be searching your mainstream sooner than we think! Stay inventory from their left wrist…. Are you tuned…. ready? STATSTALK VFACTS: SUVs drive April sales up 1.2% N ew car sales rose 1.2% in April 2015, with Australians buying 81,656 new passenger vehicles, thanks to another month of strong sales in the SUV sector. There were 946 more cars sold in April 2015, while year-to-date, sales are up 3.5%. The Federal Chamber of Automotive Industries’ VFACTS report showed sales of 81,656 in April, compared to 80,710 a year earlier. Once again Australia’s new car market was led by sales of SU’s which rose 17% (4307), compared to April 2014. However passenger car sales are down 10.3% (4005 vehicles). Light commercials were also up, by 482 vehicle sales (3.4%). Toyota, Mazda, Nissan, Mitsubishi, Volkswagen, Subaru and Honda all improved their year-to-date market share last month. Three brands have seen a drop in market share yearto-date, these are: Holden in third place drops from 10.2% to 8.9%, Hyundai in fourth place has seen a drop from 9% to 8.6%, and Ford in sixth place saw a market share drop from 7.7% to 6% YTD. Small passenger car sales fell 13.8%, but the segment continues to attract the most buyers, holding 19.8% of the new car market in April 2015 and 21.1% yearto-date. Large SUVs held 12.9% of the new car market in April, medium SUVs held 12.1%, 4x4 light commercial vehicles held 11.6% and small Sales increased in Tasmania (up 8.3%), Victoria (up 5%), Australian Capital Territory (up 2.9%), New South Wales (up 2.5%) and Queensland (up 1.7%). But, sales fell around 11% in the Northern Territory and Western Australia, and 1.1% in South Australia. Toyota was the highest selling brand in April 2015 SUVs held 10.1%. The Toyota Corolla (pictured) was the top selling car in April 2015, with 3238 vehicles sold followed by the Toyota Hilux (2789), Mazda3 (2365), Hyundai i30 (2298) and Ford Ranger (2200). Sales varied in states and territories across the county. with 18.7% of the market followed by Mazda with 9.9%, Hyundai with 8.8%, Holden with 8.7%, and Ford with 6.3%. Large SUVs and private, govt sectors sales all rise Sales for the large SUV segment are headed by Toyota’s Landcruiser outselling the Nissan Patrol (under $100,000) while above $100,000, buyers preferred the Range Rover which accounted for over 65% of sales. The large SUV segment below $70,000 was dominated by the Toyota Kluger followed by the Prado, while the Jeep Grand Cherokee was third with 989 sales. Above $70,000, the top-three in the large SUV market last month were the Range Rover Sport, Volkswagen Touareg and BMW’s X5. Two midsized models below $60,000 are the most popular of all in the SUV class, with the Mazda CX-5 and Toyota Rav4 making the top-ten for April in seventh and tenth places respectively. Above $60,000, medium SUV buyers in April preferred the Audi Q5, Porsche Macan and Range Rover Evoque. In the small SUV category the already mentioned CX-3 took out top spot (1396) followed by the Hyundai ix35 (1389 ) and the Honda HR-V (859). The big sellers for the SUV small (above $40,000) are the Lexus NX (235), in Continued on page 20 AUTOTALK.COM.AU | MAY 2015 | 19 STATSTALK VFACTS: SUVs drive April sales up 1.2% Continued from page 19 second place is the Audi Q3 (221), followed by the Mercedes-Benz GLA-Class (193). Private buyers continue to show a preference for SUVs and light commercial vehicles, with private purchases of SUVs increasing 24.4% and private purchases of light commercial vehicles increasing 17.7%. Budget boost coming for used car dealers New car sales to private buyers increased 8.8% and new car sales to government increased 1.7%. Business purchases were down, with the business community purchasing 5.6% less vehicles than in April 2014 – although this is expected to change with the announcement in the Federal Budget of a tax deduction on assets worth up to $20,000. The instant tax deduction may be a booster for the used car market, with vehicles that fall under the $20,000 cut-off point for claimable assets likely to be second-hand. Martin Ward, managing director of automotive retail group AP Eagers, says anyone with an ABN or a small business would be able to buy a vehicle for under $20,000 and his understanding is that includes second-hand cars. “The majority of our used cars are $18,000 to $20,000,” Ward says. Few new light commercial vehicles are under $20,000 but Ward says tradies may instead buy “cab-chassis” utes - vehicles sold without the rear carrying tray - to get under the cutoff. “Having said that a lot of tradies these days have Ford Rangers that are $45,000 to $60,000 - I’m not sug- gesting this is going to suit everybody,” Ward adds. Ward said vehicle retailers are expecting a significant boost from the new measure and he expected dealerships around the country were working out deals to offer to buyers before the end of the financial year. “The market will be flooded with TV advertising between June 1 and June 30 with every possible angle on this. The car industry is very good at grabbing hold of any opportunity it is given.” Mazda breaks April record, but Toyota stays on top Mazda and Toyota continue to battle it out as the top two car brands in Australia with Mazda posting its best April month in its history, while Toyota extended its overall sales lead in 2015. Mazda posted a record 8068 sales in April which saw the Japanese carmaker beat its previous best-ever April figure of 7833 retails set in 2013, according to VFACTS figures, delivering 20 | AUTOTALK.COM.AU | MAY 2015 Top 10 individual models (by sales volume) 1. Toyota Corolla 3238 (-2.3%) 2. Toyota Hi-Lux 2789 (8.4%) 3. Mazda3 2365 (-22.6%) 4. Hyundai i30 2298 (1.2%) 5. Ford Ranger 2200 (5.1%) 6. Holden Commodore 2043 (-16.4%) 7. Mazda CX-5 1868 (21.1%) 8. Volkswagen Golf 1728 (22.5%) 9. Mitsubishi Triton 1538 (12.1%) 10. Toyota RAV4 1399 (-9.6%) Top 10 biggest selling brands April 2015 (market share YTD) 1. Toyota 64,285 (17.9%) 2. Mazda 36,348 (10.1%) 3. Holden 31,853 (8.9%) 4. Hyundai 30,823 (8.6%) 5. Nissan 21,847 (6.1%) 6. Ford 21,565 (6%) 7. Mitsubishi 20,706 (5.8%) 8. Volkswagen 19,383 (5.4%) 9. Subaru 13,381 (3.7%) 10. Honda 12,205 (3.4%) a 10.1% market share with sales up 4.5% year-on-year (YOY). The standout performer was the Mazda CX-3 SUV, posting 1396 sales in its first full month on the market, The CX-3 outsold all of its competition, making it April’s number one selling small SUV. Mazda has now sold 36,348 cars, SUVs and utilities in the first four months of the year, which is also a Continued on page 22 STATSTALK VEHICLE SALES BY STATE – APRIL 2015 SOURCE: VFACTS – FCAI MONTH YTD Variance +/- Vol. & % Total Market 2015 2014 2015 2014 MTH YTD MTH YTD AUSTRALIAN CAPITAL TERRITORY 1,217 1,183 5,659 5,535 34 124 2.90% 2.20% NEW SOUTH WALES 26,264 25,625 115,808 110,923 639 4,885 2.50% 4.40% NORTHERN TERRITORY 948 1,070 3,551 3,572 -122 -21 -11.40% -0.60% QUEENSLAND 17,335 17,041 74,616 71,141 294 3,475 1.70% 4.90% SOUTH AUSTRALIA 4,843 4,897 21,970 21,753 -54 217 -1.10% 1.00% TASMANIA 1,280 1,182 5,613 5,182 98 431 8.30% 8.30% VICTORIA 22,160 21,108 97,649 92,119 1,052 5,530 5.00% 6.00% WESTERN AUSTRALIA 7,609 8,604 34,384 36,855 -995 -2,471 -11.60% -6.70% Total 81,656 80,710 359,250 347,080 946 12,170 1.20% 3.50% VEHICLE SALES BY SECTOR – APRIL 2015 MONTH YTD Variance +/- Vol. & % 2015 2014 2015 2014 MTH YTD MTH YTD Passenger 35,015 39,020 163,774 171,344 -4,005 -7,570 -10.3 -4.4 SUV 29,664 25,357 124,885 107,902 4,307 16,983 17 15.7 Light Commercial 14,527 14,045 61,410 58,866 482 2,544 3.4 4.3 Heavy Commercial 2,450 2,288 9,181 8,968 162 213 7.1 2.4 Total Market 81,656 80,710 359,250 347,080 946 12,170 1.2 3.5 MONTH YTD Variance +/- Vol. & % Micro 850 1,173 3,608 6,238 -323 -2,630 -27.5 -42.2 Light 7,179 7,499 36,578 32,939 -320 3,639 -4.3 11 Small 16,188 18,775 75,838 82,324 -2,587 -6,486 -13.8 -7.9 Medium 4,763 4,835 22,315 21,061 -72 1,254 -1.5 6 Large 3,158 3,819 13,646 15,792 -661 -2,146 -17.3 -13.6 Upper Large 241 345 900 1,228 -104 -328 -30.1 -26.7 People Movers 799 880 3,329 3,523 -81 -194 -9.2 -5.5 Sports 1,837 1,694 7,560 8,239 143 -679 8.4 -8.2 SUV Small 8,221 6,265 34,279 26,213 1,956 8,066 31.2 30.8 SUV Medium 9,916 8,923 43,159 38,002 993 5,157 11.1 13.6 SUV Large 10,508 9,294 43,474 39,843 1,214 3,631 13.1 9.1 SUV Upper Large 1,019 875 3,973 3,844 144 129 16.5 3.4 Light Buses < 20 Seats 332 340 1,034 896 -8 138 -2.4 15.4 Light Buses => 20 Seats 42 49 218 207 -7 11 -14.3 5.3 Vans/CC <= 2.5t 316 227 1,212 971 89 241 39.2 24.8 Vans/CC 2.5-3.5t 1,358 1,224 5,305 4,849 134 456 10.9 9.4 PU/CC 4X2 3,035 3,305 12,449 14,182 -270 -1,733 -8.2 -12.2 PU/CC 4X4 9,444 8,900 41,192 37,761 544 3,431 6.1 9.1 Heavy Commercial 2,450 2,288 9,181 8,968 162 213 7.1 2.4 Total Market 81,656 80,710 359,250 347,080 946 12,170 1.2 3.5 AUTOTALK.COM.AU | MAY 2015 | 21 STATSTALK VFACTS: SUVs drive April sales up 1.2% Continued from page 20 record. For the fourth consecutive year the CX-5 posted an April record. With numbers up almost 13% YOY, 1868 sales, beating the previous record, set in 2014, by over 300 units. Enjoying 7996 retails YTD, the medium SUV is averaging almost 2000 sales per month in 2015. The all-new Mazda2 hatch saw 926 sales last month. With a refreshed Mazda2 sedan arriving in late-August, Mazda expects numbers to grow further given the added choice that two models gives buyers. Mazda2 tops the light segment with 4975 YTD sales. Mazda also sold 897 BT50s and 415 Mazda6s - the latter maintaining its position as the country’s favourite mid-sized import under $60,000. Mazda Australia manag- ing director, Martin Benders says: “We have enjoyed an outstanding start to 2015 thanks to a number of new models and upgrades over the last five months, and the increasing appeal of SUVs. CX-5 has risen to another level of demand with the latest upgrade, while the appeal of the CX-3 has exceeded all expectations.” “To have sold 2261 CX-3s in just over six weeks has been simply astonishing. This tells us that those interested in a small SUV are looking for something with more style and power, and want a greater range of choice. I think we’ve delivered this,” Benders adds. Meanwhile, the Toyota Corolla was Australia’s best-selling car for the third consecutive month in April. Toyota sales will be boosted in the coming months with the new look Camry recently unveiled. 22 | AUTOTALK.COM.AU | MAY 2015 April sales of 15,299 Toyota vehicles were higher than the combined totals of the second and third-ranked brands. Toyota has delivered 64,285 new vehicles in the first four months of the year - a gain of 2% over the same period last year and close to 28,000 sales clear of its closest rival Mazda. Corolla leads the way with its sales climbing more than 9.2% this year to just over 14,900 cars - its second-highest tally on record for a January-April period. Only the boom year of 2008 was stronger. After topping the sales charts for the past three months, Corolla now has an overall lead approaching 1500 sales as Australia’s best-selling car in 2015. Corolla was supported by segment-leading results from HiLux 4x2 and 4x4, Camry, Yaris, LandCruiser 200 Series and HiAce van and bus. Toyota Australia’s executive director sales and marketing Tony Cramb said the company’s sales would continue to benefit from new models, improved customer service and innovative marketing. “We are about to enter an intense period of model launches with Toyota dealers able to offer at least 10 new or substantially revised vehicles over the next 10 months,” Cramb says. “A highlight will be the arrival later this month of a Camry range that has undergone a transformation with dramatic new styling and other improvements which we are proud to deliver to the market,” he adds. “In addition, the entire auto industry is benefiting as private and business customers take advantage of strong competition and record-low interest rates.” “Our success depends on your success” - Vehicle Logistics Specialists - Full Service Package - Regular Shipments - Department of Agriculture Pre Inspection in Japan - We care about Customer Service and efficiency - At Autohub, We Understand your business www.autohub.co/au 1300 132 227 [email protected]
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