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THE Federal Chamber of Automotive Industries (FCAI) is expected to soon take steps to bring to an end the cybercar problem that has been distorting car industry sales figures for years and placing massive financial stress on car retailers who have registered cars to meet sales targets.

GoAutoNews Premium has been told that the FCAI is in final discussions to get agreement across all car importers that no car will be counted as a reported retail for VFACTS unless it is registered to a genuine consumer.

We have been told that some car-makers are still not keen on the plan but it is hoped that an agreement will be in place by July 1.

One FCAI insider said that there was a meeting in March to consider what the appropriate action might be to solve the issue.

“They are definitely on it,” the insider said. “All the work that has been done over the past five years with people slamming away at this issue has finally got their attention.

“It is a serious problem. It leads to all sorts of negative behaviour in dealerships and it will be good for it to stop.”

FCAI chief executive Tony Weber said in a statement to GoAutoNews Premium: “The FCAI has a robust system of data collection which is outsourced to a professional data collection organisation, not completed in-house.

“The organisation and the process is subject to continuous improvement, and we are continuously working through that process, as has long been our custom.”

But cybercars are very destructive.

OEM sales departments have been showering cash on dealers to report cars sold in the last days of the month to get sales targets over the line for the dealers. But if the dealership falls short of the target, dealers get no bonus at all, and even if they get the cash it never seems to be enough to cover the stress of holding the cars in stock and funding fresh cars coming in to replace them.

Equally, the salespeople inside OEMs themselves are also under orders from head offices overseas to meet targets which ensure bonuses for the local managers of these car importers.

Reporting cars as sold to meet targets has become normal practice for years.

The issue has also brought the car industry into disrepute because it reports sales data that is simply not accurate, allowing car-makers to claim sales leadership numbers for themselves or various nameplates that are not real. There are serious implications for the car-makers in terms of market claims and there is a risk that the ACCC might look at the issue unless the practice is halted.

While some companies choose not to participate, the practice has been carried out at all levels of the market with both luxury car-makers and volume sellers all desperate to clear over-ambitious orders for cars from overseas car plants.

Stories abound of dealers of some luxury brands holding up months of stock, nine to 12 months in some examples, that have been reported as sold but still sitting in dealer used car yards.

Several years ago one dealer that was put into receivership was found to still be holding 600 cars that it had called as sold to meet sales targets that is was endeavouring to sell on to genuine buyers.

GoAutoNews Premium has data that shows that cars reported as sold, but still remaining in dealer stock, total around 150,000 units over 12 months. This puts great strain on dealers who have to find the funds to stock these cars as they build up in dealer inventory.

The data shows that it is not unusual for 20 to 40 per cent of cars reported as retailed by some OEMs in some of the smaller markets like South Australia to have been “called” as sold when they were left sitting at the dealership without a new owner in sight.

There were even examples of cars being “called” as retails for one prestige importer that were still on the ship.

The problem of fudging the figures was always going to rear its head from the day the car industry took over the gathering of its own sales data from the independent previous incumbent, Paxus.

There was a fear that the fox was going to be looking after the hen house.

In those days, Paxus gathered its data from feeds of motor registration data from each state. But the data was far from ideal. Some states were so concerned about privacy that only a few items of identifying data were made available which compromised the accuracy of the sales numbers.

Other variables were when the local police sergeant finally got around to “putting in the registrations” which saw many months of activity sitting within the one figure. This produced a surge of apparent sales when there was no surge at all.

Keying errors were rampant. One investigation of the accuracy of registration data in one state found keying errors in names, addresses, chassis numbers and engine numbers at more than 90 per cent.

Under the VFACTS system, dealers were to report retail sales to their factories and, because the cars were correctly documented by the car-makers’ systems, the result in terms of make, model and variant was always going to be accurate.

But, when VFACTS was being launched, a big issue was what to do to prevent car-makers registering cars to gain market or segment leadership.

It was common practice for both Ford and Holden, for example, to register cars – thousands of them – on the last days of December in order to fall over the line as market leader for the year.

Leadership was said to be worth a bonus of around 10 per cent of sales from people who thought the market leader must sell the best cars.

At the time, the media was assured that there would be no cheating under the VFACTS rules. I know because I asked the question.

The mechanism, we were told, was very simple. Under the VFACTS system, all car-makers contribute the data for their brands and nameplates, and these get processed along with all the other data from the other car-makers.

The penalty, we were told, for fudging registrations was that the car-maker would only get access to its data and that it would not get access to the data for the other cars-makers. This would put it at a competitive disadvantage in the analysis of its competitive position.

To my knowledge this penalty has never been applied despite widespread calling of cars.

Perhaps the time has come for the FCAI to produce this big stick and actually use it to ensure that calling cars that are not sold never happens again under these proposed recommendations from the FCAI.

By John Mellor

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