As you know no one had sex until 1965. No one. Not ever. Then we had the sexual revolution, helped by the contraceptive tablet (we call one of the Weekend Australian Racing Team the pill because he/she/other has no conception). Then, once Big Ben struck 12 on January 1, 1965, everyone went at it like rabbits to make up for 3000 years of abstinence. Everyone, that is, except people like me stuck in Catholic boys’ schools where, if you had sex with others, you immediately went to hell. Hmmm. Going to hell? Going blind? I wear very strong glasses.
Cars are much better than sex. But, while you and I see them as objects of desire filled with emotion and endless possibilities, the car industry sees them as a simply a vehicle to sell you high margin finance, accessories, warranties, spare parts and servicing.
While the sexual revolution started in 1965, the car industry has gone backwards towards extinction since October 1, 1908 with the introduction of the first really popular mass produced auto, the Ford Model T. Of course, the sex appeal of cars and indeed sex in cars continues to this day.
It may well stop with the insidious spread of the electric car — which has no appeal, sexual or otherwise, and may well cause a variety of yet unimaginable ailments as result of being so close to big batteries (50 per cent of the weight of the car) full of lithium, nickel, cobalt and aluminium oxide. Give me lead any old day.
“Buying a new car is one of the most significant financial decisions consumers make, typically second only to the purchase of a home,” the motorists’ friend, ACCC boss Rocket Rod Sims, says in his report on new car retailing. When most of us buy a home, there is a big power imbalance. We buy a home once every pancake Tuesday; on the other hand real estate agents and mortgage brokers sell and finance lots every day. We are full of emotion, scared we will lose the house to another buyer; they are full of fees, loan origination fees, commissions, trailing commissions.
Australians buy six new cars a minute in every waking hour of every day. While some of us keep them for an average of 10 years most of us trade in our old car well before that. So just like buying a house you are full of emotion, uninformed and a sitting target. As Rocket Rod says, “a common pricing strategy for car manufacturers and authorised dealers is to discount new car prices to maximise sales of aftermarket services”. In other words, you have a choice of a gazillion car models but very few choices for repair, service and replacement parts.
Basically, this means that like a shaver the money is in the blades rather than the shaver itself. So, parts prices in Australia are rising higher than the cost of new cars, and Australia has some of the most expensive spare parts and servicing in the world. On top of that, Rod says that your dealer, under pressure from the manufacturer, is more likely to charge you for repairing your car “even where cars have known and systemic mechanical failures which would entitle a consumer to a replacement or refund under the consumer guarantees”. Cue Mazda and particularly what appears to be a potentially dangerous Mazda CX-5. Even if the dealers come to the party, “the widespread use of nondisclosure agreements when resolving consumer complaints suggests that consumers are not entitled to their consumer guarantee and warranty rights unless a nondisclosure agreement is signed. Non-disclosure agreements also substantially reduce information in the marketplace for new buyers about defects and safety issues that are common to a particular car”.
But wait, there’s more: manufacturers lie about how much juice you’ll use and how many emissions the car will pump out (cue VW dieselgate). Of course, you’d be entitled to think that as we moved from the Model T to the Volkswagen Golf and Camry, quality would have improved. In German cars it did till about 1994, then died for a long time, but some brands have come back over the last few years. As quality guru J.D. Power says, “as for the common belief that Japanese cars have the best quality, it’s time to cue the Frozen soundtrack and let it go”. The reality is that, for the most part, Kia and Hyundai are producing the world’s best quality cars.
In January this year (ie in the last three weeks) Honda, Mercedes, Toyota, Jaguar, Range Rover and Aston Martin have all recalled cars. Over the last few years just about every auto including Rolls Royce, Bentley, Tesla and Maserati has been called back into the shop. McLaren have not.
Anyway, proving that timing is everything, last month the Federal Chamber of Automotive Industries boss Tony Weber said that for a document that was some 18 months in development, Rod’s report not only revealed a poor understanding of the industry but also provided meagre evidence to support the need for change. “The ACCC’s report appears to be predicated on a very small number of complaints which it uses to tarnish Australia’s $17.5 billion retail motor industry. This is not only unfair, it is inaccurate.”
Oh no! Fast forward four weeks and the petrol heads’ new friend, acting ASIC boss Peter Kell was reporting that insurance companies were falling over themselves to refund money to car owners. Some of Australia’s biggest insurance companies including IAG, Suncorp, Allianz and QBE worked with car dealers to sell car buyers add-on insurance like tyre and rim, sickness, asset protection and extended warranty insurance.
Pete says over the three-year period from 2013-2015 punters paid $1.6bn in premiums and received just 9c in the dollar back. “Where did the money go?” Pete asks.
About half went back to the companies and the insurers paid the dealers $602 million in commissions. “We also had identified the related caryard practice of so-called ‘flex commissions’ (where) the finance companies not only allowed car dealers to decide what rate of interest to set for the loan, they financially incentivised dealers to charge customers a higher interest rate.
Knock, knock. Who’s there? “It’s your editor reminding you it’s the end of the month and you haven’t written your compulsory motorbike article.”
Well, that’s because I would rather eat cold vomit than write about bikes.
“Well that’s nice, but do you want to keep your job?”
On Thursday night you missed buying the ex-Steve McQueen, Otis Chandler 1914 Pope 61ci Model L Twin Engine bike because you didn’t have $170,000. There you go. You read about bikes and I keep my job.
