Removing second-hand car import restrictions could significantly lower car prices

I was happy to learn from a former Canberra colleague yesterday that I’m cited in the Productivity Commission’s January 2014 Position Paper on the car industry, regarding the benefits that would come from removing the restriction on second-hand car imports. The Productivity Commission notes (Box 3.6, page 101):

Pawson (2012) reported that the entry of vehicle imports from Japan ‘gave New Zealanders access to well-priced late model cars, further increasing the country’s high level of car ownership’.  A survey by Tunny (2011) of prices for second-hand Toyota Corollas (2006 automatic hatchback model) in Australia and New Zealand found that vehicles of similar mileage were on average almost 20 per cent cheaper in New Zealand than in Australia. [emphasis added]

Tunny (2011) is my article in the CIS’s Policy journal from that year: Carr’s Car Cash and Australia’s reform malaise.

I’ve previously posted on the benefits that would come from freeing up second-hand car imports:

Let in those cheap second-hand Japanese cars

The second-hand car import restriction is a protectionist measure that has been maintained as part of agreements by successive Commonwealth Governments with the car industry. Now that the car manufacturers are leaving Australia, any rationale for maintaining it has been removed.

Also on industry policy matters, I’d recommend listening to Steve Austin’s interview of Queensland Treasurer Tim Nicholls yesterday morning (Are Government subsidies worth it?), which appears to have been inspired by my post from yesterday morning regarding State Government industry assistance (Scope to cut Qld Government industry assistance).

On yesterday’s discouraging labour force data from the ABS (see the Treasury information brief), I’ll continue my policy of not reacting too much to one month’s figures, but would note that the Queensland data are consistent with my view that the jobs market has remained sluggish in recent months and that the apparent downward trend the ABS was reporting was illusory.

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5 Responses to Removing second-hand car import restrictions could significantly lower car prices

  1. The Happy Hillbilly says:

    Part of the reason second-hand cars are also cheaper in NZ could be that wages are also lower (except those flying over here to work in the resource sector).

    But yes, I can’t really think of any good reason to keep restricting them once the car industry has left. I still think that this measure, industry tarrifs etc should remain until the last car manufacturer has departed, otherwise it would likely hasten their leaving and bring forward a wave of unemployment before there is any chance of adjustment.

  2. The Happy Hillbilly says:

    On yesterday’s labour force data – it doesn’t appear to have an interest rate rise written on it.

  3. kirbyp says:

    Congrats on the citation Gene!

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