VICTORIAN dealers and the state government are losing out on sales and millions of dollars in revenue because of an inconsistency in the Victorian law on vehicles sold by consignment and exacerbated by the ‘super luxury’ stamp duty that makes similar vehicles more expensive than a neighbouring state.

Victoria is the only state in Australia that does not permit consignment selling by dealers of a vehicle from a member of the public.

New and used-car dealers, commercial vehicle dealers and dealerships specialising in 4WDs have complained about the inequities, said the Victorian Automobile Chamber of Commerce (VACC).

In a draft report to members, the VACC said the disadvantages of the inability to consign cars was “ordinarily being felt through a lack of consignment flexibility in this state”.

“However the impacts of this anomaly have been sharply exacerbated following the recent introduction of super luxury stamp duty (SLSD) on premium and 4WD vehicles in Victoria,” the VACC said.

“Importantly, the flow of vehicles leaving the state and lost opportunities for the government to collect duty has reached epidemic proportions.”

The SLSD recently led to NZ-based motorhome rental company Tourism Holdings Ltd, through its Australian subsidiary, taking the Victorian State Revenue Office to court and winning its case. It led to the rental company escaping a $2.9 million SLSD bill.

The VACC’s draft report said it was, on behalf of its dealership members, seeking “a level playing field with their interstate counterparts and auction houses in the acquisition and sale of motor vehicles”.

“The business environment for dealers, particularly those who specialise in high-end, rare, exotic vehicles and commercial vehicles, has changed markedly since consigning vehicles has been prohibited in Victoria,” the draft report said.

“VACC members who trade in high-end vehicles achieve sales prices of $500,000 and beyond, netting the Victorian government revenue of approximately $45,000 per vehicle, or more.

“It is obvious that interstate dealers are enjoying greater sales activities, and in turn, the various state governments enjoy increases in motor vehicle duty, at the Victorian government’s and Victorian dealers’ expense.”

 

The VACC wants to lessen the impact on dealers of the SLSD and provided with greater access to vehicles that are not subject to issues including floorplan financing requirements.

It has proposed that an optional exemption be provided to Victorian dealers who trade in vehicles that meet the SLSD thresholds and who wish to consign vehicles from members of the public.

“This will also ease the financial burden borne by large luxury dealers needing large stock holdings,” the chamber said.

“VACC remains vigilant to the sanctity of the dealer system and the buoyancy of the Motor Car Traders Guarantee Fund. The evidence publicly available relating to admitted claims on the fund shows that the Victorian LMCT sector is largely compliant and understands its legislative obligations.

“There is also sufficient evidence (and educated opinion) to suggest that, historically, a large portion of claims where there was proven to be consumer harm, as a result of consigning a vehicle to a dealer, could have had a much lesser impact if the regulator had acted appropriately when forewarned.

“This terrific opportunity presents itself to the Victorian government to increase its income stream from duties attributed to the sale of motor vehicles, minimise the unquantified private sale black economy (which may amount to the several million dollars a year in lost motor vehicle duty revenue) and also provide Victorian dealers a more competitive, and level playing field.

“VACC urges the government to quickly respond to this matter and to amend legislation to enable the proper collection of duties, along with the creation of competitive equity for Victorian luxury car dealers.”

The chamber made the comparison between an auction house and a Victorian dealership. It said that auction houses did not have to disclose any fixed or driveaway prices and also did not have to continuously remind the public of the government stamp duty and charges in their advertisements.

“If the vehicle is not sold via online auction closing date, they can have the vehicle available online for park and sell, which becomes a direct competitor to the disadvantaged traditional Victorian dealer,” the VACC said.

Victorian prestige dealers have no chance of competing with dealers and auction houses that consign vehicles from the public and do not pay an SLSD as required by Victorian dealers.

“This is troublesome for traditional dealers, providing a difficult unfair trading environment as the availability of good, quality stock in a tough market is difficult to come by,” the VACC said.

“Having to pay over the odds for good cars and then compete in the most competitive market ever is having a negative impact on this market.”

The VACC said that vehicle stock is being redirected to interstate dealers or auction houses and said that both “hold an unfair and competitive edge over Victorian dealers”.

“The Victorian dealer must acquire stock and must either hold a floorplan arrangement or have access to funds to buy a vehicle outright, particularly high-end luxury and rare cars that take longer to sell,” the chamber said.

“This scenario provides auction houses with yet another unfair market advantage.”

By Neil Dowling