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Rushed Car Safety Rules Hit Buyers

November 16, 2001

Rushed Car Safety Rules Hit Buyers

Proposed motor vehicle safety regulations could hit car buyers heavily in the pocket and damage the economy.

Independent Motor Vehicle Dealers Association (IMVDA) Chief Executive David Lynn says if the Government bans cars that don’t meet new frontal impact standards from April next year, it will eliminate imports of pre-1995 vehicles, reduce choice and increase costs without significant safety gains.

The proposed regulations would allow imports only of vehicles with specified design features that provide greater protection for occupants in a head on crash.

David Lynn says the IMVDA supports the proposed impact standard but it should be phased in over two years to become fully effective in 2004.

He believes the Government is rushing possible implementation.

“It will force many people to delay replacing their cars and older models will stay on the road longer,” he says. “This will lower the average safety level of cars for the next two years, reduce choice, and force buyers to pay more when they do decide to change.”

Mr Lynn says that 50% of the cars that would otherwise enter New Zealand next year won’t be allowed in.

“Clearly some of that volume will be replaced by newer cars but total volumes will be down in 2002.”

Mr Lynn says a Land Transport Safety Authority (LTSA) analysis prepared for the Government spells out costs to safety and consumers’ interests over the next decade and does not provide statistical support for the proposed policy change.

A New Zealand Institute of Economic Research analysis of the LTSA report says that “the economic effect of the 2002 implementation option is a mid point welfare loss in the range of $185 million to $255 million. The net distributional effect or income transfer is away from New Zealand buyers (who may be low income households or small businesses) mainly towards wholesalers in Japan and overseas car manufacturers”.

In simple terms this means New Zealand car buyers collectively will be worse off by several hundred million dollars and the beneficiaries will be the Japanese car companies.

Mr Lynn says new car companies have lobbied the Transport Minister vigorously on this issue because they want to reduce used imports and sell more new cars with increased margins.

He says unless the Government handles compliance issues carefully, those companies could use the new regulations to increase their share of the used import trade that they have entered in recent years.

“That will be bad news for all car users,” Mr Lynn says.

The IMVDA has made strong representations to Government officials and wants an urgent meeting with Transport Minister Mark Gosche to discuss its concerns.
“It is vital that New Zealanders’ interests are placed ahead of offshore companies and we want the Government to understand the potential for damage before it makes a final decision,” David Lynn says.

End end


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