Component pricing and motor vehicle advertising—frequently asked questions
Section 48 of the Australian Consumer Law (ACL), contained in a schedule to the Competition and Consumer Act 2010, requires that where component pricing is used in a representation made by a business to consumers, a single price must also be provided. The single price must be stated as prominently as any component and must be inclusive of all quantifiable amounts so that it shows the minimum total price payable by a a consumer to obtain the relevant product or service.
The motor vehicle industry frequently uses component pricing in its representations to consumers. The questions and answers below have been developed to better explain the application of the changes to s. 48 to the industry.
Please note that a reference to manufacturers includes a reference to distributors.
I am a car dealer in the Albury–Wodonga region. Statutory charges vary across state borders, so how do I provide a single price?
If your advertising will potentially reach two distinct classes of consumer (e.g. an advertisement in the Border Mail that will reach residents of Victoria and residents of New South Wales), you may wish to provide a single price applicable to one class of consumer, stating clearly that is the case. Alternatively, you may wish to provide two prices, again indicating clearly what price applies to which group.
Are third party automotive data or information providers captured by s. 48?
Third party automotive data providers are, in the ACCC’s view, not captured by s. 48 because they are not making price representations in connection with the supply, or the promotion of supply, of a particular automotive vehicle. When reproducing data from these providers, however, you need to ensure that it does not have the potential to mislead or deceive consumers about a particular vehicle being for sale and available from these parties.
What about journalists providing price information in their reviews of new cars?
Price information provided by a journalist or publication as part of a review or opinion offered about a vehicle would not generally be considered as a form of promotion or supply within the meaning intended in s. 48. This would also be the case for comparative price lists published in motor industry guides and magazines.
Can I target my advertising to a specific class of consumers?
If you wish to make a price representation for a specific class of consumers, you may do so provided that your advertising is clearly directed to that class and will be relevant to most people.
For example, you may advertise the ‘primary producers’ price of a vehicle in a rural newspaper. However, if you wish to advertise a price for ABN holders in a national newspaper, you would also need to provide the price as it applies to consumers.
Will advertising a vehicle at a specific price prevent consumers negotiating deals?
Advertising a single price for a vehicle does not prevent consumers from negotiating a lower purchase price.
Does s. 48 apply to motor vehicles sold at auction where reserve prices may be set?
Section 48 applies to vehicles sold at auction, but because the final price to be attained at auction is generally unknown, it is unlikely to be quantifiable for the purposes of this section. However, you may wish to seek legal advice as to the applicability of s. 48 to reserve price representations.
Does s. 48 apply to motor vehicles sold at fixed price sales at an auction house?
Section 48 applies where vehicles are offered for sale at a fixed price, whether by a dealer or an auction house.
Are the items in s. 48(7)(a)–(c) the only things I need to include in a single price representation?
The items listed in s. 48(7)(a)–(c) indicate the types of components that must be included in a single price. However, in the ACCC’s view this is not an exhaustive list.
Does compliance with s. 48 mean that I have met my legal obligations?
No, complying with s. 48 does not mean that you have complied with the ACL more broadly. You should take particular care to ensure that your advertising does not have the potential to mislead or deceive consumers or to misrepresent the vehicle that you are selling.
Under s. 48, the single price is the total minimum price a consumer needs to pay to obtain the relevant product or service. For the motor vehicle industry, it will generally be the dollar amount the consumer must pay to take ownership of the vehicle, which can be calculated by adding up all components that are quantifiable at the time the representation is made. These include a charge payable by a consumer to purchase the vehicle and any tax, duty, fee, levy or charge for the consumer to supply.
Do delivery charges need to be included in the single price?
Section 48 does not require sending and delivery charges to be stated in the single price, but it does require that these be clearly stated elsewhere in the advertisement. However, you should be aware that, in the ACCC’s view, dealer delivery (as currently imposed by the industry) does not constitute a delivery or sending charge that would be exempted by s. 48 and as such it should form one of the components of a single price representation by a motor vehicle dealer.
What about optional extras?
The single price must be the single price of the vehicle as depicted in the advertisement. If the vehicle shown includes optional extras such as a turbocharged engine and a spoiler, the single price must be inclusive of the costs of the turbo engine and the spoiler. If the advertised vehicle as depicted in the advertisement does not feature any extras, then the single price required will be that of the vehicle only.
How should the single price be stated?
The single price must be represented in a way that is at least as prominent as any component price shown. In considering this, you should consider the font used for the text, its size and colour, and its contrast with the advertisement’s background and the medium in which you are advertising.
Does the single price need to be stated as a drive-away amount?
In the ACCC’s view, s. 48 requires manufacturers and dealers to provide a single (total) price inclusive of all component amounts. It is up to the advertising party whether they wish to state this as ‘drive-away’ or simply provide the actual price.
I am a second-hand motor dealer and statutory charges are paid directly by the consumer to the relevant authorities. Do I have to include them in the single price?
No. Where a tax, fee, levy or charge is not collected by a dealer but instead is paid by the consumer to a relevant authority, that tax, fee, levy or charge is not a component for the dealer’s selling price.
Are manufacturers, distributors and dealers able to use from pricing?
Manufacturers, distributors and dealers are able to state a single price as being ‘from’ provided it is the minimum total cost for a consumer to obtain the motor vehicle and that the use of the term does not have the potential to mislead or deceive consumers about the availability of the vehicle at the from price.
When is a component quantifiable?
A component is quantifiable if it may be readily converted into a dollar amount. If a component fluctuates or varies, you should calculate the component based on information available at that time and clearly advise consumers that it may be subject to change. The fact that a component may vary does not mean it cannot be quantified.
Where a component price is contingent on the supplier’s costs or may vary, how should the single price be calculated?
Where a price is contingent on supplier’s costs or may vary, you should provide the price to the extent you are able to quantify it. For example, you may advertise a service as '$X/hour for servicing + parts').
The component costs of a motor vehicle may vary between geographic regions or by the class of consumer who purchases the vehicle. How should the single price be calculated?
The components of a single price should be calculated on the basis of that which applies to a typical or average consumer, without any concessions or discounts. The price provided in a particular region should be calculated as it applies to that geographic location.
Yes, you can still choose to use component pricing; however, if you do so, you must provide a single price as prominent as any component.
Does s. 48 apply to manufacturer, dealer and cooperative advertising?
Yes, s. 48 applies to all price representations made about the supply or promotion of products or services. It applies equally to manufacturer, dealer and cooperative advertising.
Does s. 48 apply to new, used and used demonstrator vehicles?
Yes, the requirements of s. 48 apply to the advertising of new, used and used demonstrator vehicles to consumers. The provision applies to the sale of all goods and services ordinarily supplied for personal, domestic or household consumption—including motor vehicles.
Does s. 48 apply to the private sale of motor vehicles?
Section 48 will generally not apply to private sales for motor vehicles because the selling party is not considered to be in trade or commerce for the purposes of the ACL.
Does s. 48 apply to motor vehicles advertised to other businesses for commercial purposes?
Many vehicles, such as utility vehicles, have both commercial and non-commercial uses. Where an advertisement or price representation is made exclusively to another business, it does not need to comply with the single price requirement of s. 48. However, if the advertisement may be viewed by both businesses and consumers, you need to provide a single price for consumers and, if you wish, one for businesses if it may differ.
When would an advertisement be taken as being exclusive from one business to another?
The exclusivity of a price representation being made to a business depends on the circumstances; however, as a general rule there should be no risk that a consumer might view and rely upon the advertisement.
