MArket entry
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Currently, there are relatively few barriers to exporting automotive products to Australia. If products can be classified as automotive items of minimum 51 percent U.S. content, there are no customs tariffs under the U.S.-Australia Free Trade Agreement. Documentation stating the rules of origin should accompany the shipment of goods. A goods and service tax (GST) is levied at a rate of 10 percent on the landed value of the goods.
Vehicle compliance is handled by the Australian state in which the vehicle is to be registered. Compliance can sometimes be more onerous than experienced in the U.S. Cars that are modified from manufacturers’ specifications will require an engineer’s report, and in many cases, being street legal in one state does not automatically make the vehicle legal for registration in another. At the federal level, Australian Design Rules (ADRs) are the guiding principles in terms of Australian design specifications for new vehicle standards.
Barriers
U.S. manufacturers have a good reputation in Australia for making high-quality, well-engineered auto aftermarket and specialty products. The best segments for U.S. manufacturers in the local market include supplying aftermarket performance parts, off-road and light truck accessories, repair tools and consumables.
Current Market Trends and Demand
The major vehicle manufacturers by market share are: Toyota (18.2 percent market share), Mazda (9.8 percent), Hyundai (8.2 percent), GM Holden (7.6 percent), Mitsubishi (6.8 percent) and Ford (6.6percent). Australia is one of most open automobile markets in the world, with almost 70 brands and 400 different models being offered for sale. Apart from the Toyota Hilux, popular vehicles include: the Toyota Corolla (40,330 sold in 2016), Mazda3 (36,107 sold in 2016), and Hyundai i30 (37,772 sold in 2016).
Typically, U.S. manufacturers sell into the local market through importers or wholesalers that in turn distribute to the retail market, as well as service and repair shops. This model has traditionally worked well as the local partners also provide marketing, pre sales, and warranty support. However, Australians are also avid users of the internet to see if they can find the same product cheaper. As such, nowadays, we note the rise of consumers buying grey imports online. These items are typically sold by an American-based wholesaler or the manufacturer itself, thereby bypassing the local distribution partner.
Market Entry