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All advertised pricing will become 'drive-away' from May 25, under new regulations for all consumer products which will be enforced by the Australian Competition and Consumer Commission.
The ACCC will be enforcing all-in pricing under the Trade Practices Act and, for car buyers, that means an advertised price that will include the vehicle, dealer preparation and delivery charges, as well as statutory fees for registration, stamp duty and third-party insurance cover.
The new rules are likely to mean a rise in most advertised prices, particularly by major manufacturers and importers. But they could also lead to an absence of prices, particularly in national television campaigns.
The change is being hailed as a major breakthrough by the ACCC.
"The new law will not only mean consumers have accurate price information, but also that businesses have a more level playing field on which to compete when it comes to price representations," says ACCC chairman, Graeme Samuel.
Apart from cars, the rules are expected to have a significant impact in areas where there are many components for a final product, including the travel industry.
The ‘drive-away' push comes more than 15 years after Hyundai led Australia into the era of 'drive-away' pricing with its original deals on the bargain-basement Excel.
They are expected to be welcomed by buyers but the final detail in the regulations, and the potential for an ACCC crackdown, is ringing warning bells with car companies who say they will struggle to have national advertising with a price which is applicable across Australia.
"We are a little worried that the ACCC has picked up the ball and run out of the stadium," says Andrew McKellar, the chief executive of the Federal Chamber of Automotive Industries.
"One of the consequences might be, not only to make the price transparent, but invisible. Better to do that than be in the ACCC's gunsights."
McKellar says the biggest concerns for car companies are the requirement for a 'minimum quantifiable price' and the different on- costs for different customers in different parts of Australia.
"Does the price mean you cannot negotiate below that?" he asks.
"They have left us with some quite difficult loose ends. There has now got to be a bit of fancy footwork to resolve the issues, as best we can, in the final run-in or as quickly as possible after that."
McKellar expects negotiations to continue for some time because of the complications of implementing the ‘drive-away’ bottom line.
"In principle it's commonsense. But once you get into practice with a national market ... it gets a bit complicated," he says.
"The industry certainly accepts the intent of the underlying legislation. There has been a long period where this has been in development. The motivation and the intent has broad acceptance."
But he warns on the devilish detail.
"There are a number of issues which are a potential concern, particularly as it applies to manufacturer advertising.
"It begins to get far more complicated. The issue is whether we are tying ourselves in knots because of the increased constraints. Is that consistent with the policy intend. There are processes to clarify and we will be having meetings to try and do that."
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