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Why are cars so expensive in Australia?


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#1 gav240z

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Posted 14 June 2010 - 10:42 PM

As the title says, what makes cars (especially Japanese cars) so expensive in Australia?

So I've been comparing car prices in Ireland / UK with Australia and I just can't work it out. Cars seem so expensive back home, compare say a 90's Toyota MR2, A Honda S2000, Nissan Skyline R33 / R34, Mazda RX-7 and even after doing currency conversions the Australian market seems way over-priced or at least they hold alot more value for a longer period of time than what they do in Europe or even the US for that matter.

Is it to do with the price of these cars new? Say for example a Mazda RX-7 / 300ZX used to sell for around 80,000 AU brand new. Where as in the UK an RX-7 was 35,000 pound.

Been trying to work out why cars over here loose so much value so quickly and cars back in Australia hold value for so much longer.




#2 MaygZ

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Posted 14 June 2010 - 11:10 PM

It's quite simple really.

We the consumer determine the price of anything.  We are prepared to bend over and pay too much for many things not just cars.  We are the most expensive place in the world to buy the iPhones and iPads etc.  I believe it is the same with Xbox etc.

Economists will perpetuate the great myth that we are a small market and far away, so we can't offset the cost of import with large turnover, but the truth is things are expensive here because we will pay it.  We have to have the best of everything, each new toy and we will and are now used to paying it.

We do it with houses.

Don't get me started on the negative effect of the dual income family after WWII!!

#3 stevo_gj

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Posted 15 June 2010 - 01:33 AM

That makes sense. We have a great consumer culture and we have a high proportion of high income earners IIRC. Sucks hey! Still I'd rather pay more for my toys and live here than anywhere else :)

#4 gav240z

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Posted 15 June 2010 - 04:18 AM

Don't get me started on the negative effect of the dual income family after WWII!!


Knock yourself out, this is the off topic section after all :).

The Australian market is flooded with second hand cars, so it seems strange that cars are priced so high. I'm sure there are more cars for sale then there are buyers so it still perplexes me.

#5 260Coupe

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Posted 15 June 2010 - 08:29 AM

The biggest issue in the UK which drives depreciation is the huge cost of vehicle insurance and the separate cost of the third party liability cover (we pay this as a fixed sum in te rego) . which depends on vehicle type , engine size etc.
Also cars with over 2ltr engines plummet in value due to the perceived running cost expense.

When I lived in the UK in the mid 90's I was stunned by the "cheapness" of relativley new cars......I bought a 1989 BMW 325i for 3000 pounds in 1994 (the same car was still over $30k here in Australia)............but then when I went to insure it in London I was quoted $2500 for comprehensive cover! So I stored it and shipped in home.
I was content on driving a little 1984 1.3 ltr Ford Escort (a Laser here in Oz) which I bought for 200 quid and didn't bother with insurance (or road  tax or MOT for that matter ) - but officer I am a tourist - what is this "tax and MOT you speak of ??
 





#6 gav240z

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Posted 15 June 2010 - 09:06 AM

The biggest issue in the UK which drives depreciation is the huge cost of vehicle insurance and the separate cost of the third party liability cover (we pay this as a fixed sum in te rego) . which depends on vehicle type , engine size etc.
Also cars with over 2ltr engines plummet in value due to the perceived running cost expense.

When I lived in the UK in the mid 90's I was stunned by the "cheapness" of relativley new cars......I bought a 1989 BMW 325i for 3000 pounds in 1994 (the same car was still over $30k here in Australia)............but then when I went to insure it in London I was quoted $2500 for comprehensive cover! So I stored it and shipped in home.
I was content on driving a little 1984 1.3 ltr Ford Escort (a Laser here in Oz) which I bought for 200 quid and didn't bother with insurance (or road  tax or MOT for that matter ) - but officer I am a tourist - what is this "tax and MOT you speak of ??


Very good points, I tend to agree. I'm trying to get myself into an FD-RX7 which is pretty cheap here and I was wondering the same thing about storing it and then shipping it back to Australia. I'm pretty certain you have to own the vehicle for at least 1 year before you can import it into Australia duty free.

However does this mean you have to have had the car registered and been driving it for 1 year or just stored it away? I guess this is what I'm trying to clarify.

Here in Ireland it's NCT (National Car Testing) which is the same as a RWC in Australia, then you have road tax which is based on engine capacity as you mentioned. With the rotary they pull out some b.s figure of 1.7 ltr engine god knows how they got to that figure from a 13B. Then insurance and that's the killer 2,500 euro ouch! and I'm 28, no claims, perfect driving record full licence etc.. "oh but you have no experience on Irish roads" load of bollocks, I've been driving rental cars around for the past 3 years without a bother.

Like you said I can get an FD-RX7 pretty cheap, compare that to Australia and you are looking at min 20k for an older 1992 / 1993 model. I can get a 1999 model for less than half that.

#7 JP

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Posted 15 June 2010 - 09:41 AM

Volume.

If youre talking about new cars then with any mass production volume brings down cost.
Australia struggles to sell 1 million new cars a year. China do it per month. Combine this with the large brand mix we have here further reducing volume per maker, each maker has to charge a premium per car to recover costs in geting it here (or building it). To further reduce new car sales are the soft roadworthy and emissions laws meaning old cars stay on the road longer careating a large used car market to compete with new cars..

If youre talking used cars (which you are), then there would be spill on effect from the price of new cars, making it only possibly for many to afford used cars thus propping up the used car market. Combined with the above mentioned soft roadworthy rules, used cars a a viable option and therefore worth more.

#8 Quandary

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Posted 15 June 2010 - 11:01 AM

Every year I usually spend 1 or 2 months in Korea.  Perhaps the most boring country in the world as far as cars go (but excites me by the prospect I could import a Z from Japan so cheaply ;D).  By Korean standards, a 5 year old car is too old, and a 2L 4 door sedan top of the range Samsung, Hyundai, and to a lesser extent Kia is a "luxury" vehicle (something we would call here a family car!).  My view on the different Australian pricing was simply the demand for longevity in Australian vehicles, the longevity of value, and the higher social value we hold our cars at.  Where as in another country, Korea for example, where cars don't have that same social and asset value, you can get by without them.

Also we need to consider the ridiculous value added situation that we have here.  We export our raw materials and minerals for energy and production, which can be a network of travel through several continents in most situations, and then we finally get the product imported back here from the very materials that we sold!

#9 sco_aus

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Posted 15 June 2010 - 12:13 PM

We have some of the highest import taxes in the world, it makes a huge difference, hence the much cheaper Falcadores etc

#10 chartoo

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Posted 15 June 2010 - 01:34 PM

Well im living in thailand atm and the minimum wage here is $3AUD a day  but a new corolla is still gonna cost you $24, 000. You can see why ppl have such a big party when they buy a new car

#11 sydney mike

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Posted 15 June 2010 - 02:15 PM

I'd say it's probably got something to do with exchange rates. Also our distance from the Euro continent. Also competition as well. I may be wrong but I think the emergence of companies like Hyundai have given the traditional Japs something to think about.

But I think for sure, cars have come down in price in real terms.

In 1993 my dad bought a new Pulsar Q auto, steel wheels & hubcaps, no power windows or mirrors for $22,000.

Last year I bought my new work car-2009 Corolla Ascent auto, no alloys but front fast-glass and 7 airbags, ABS, VSC for $22,900.

#12 sco_aus

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Posted 15 June 2010 - 02:20 PM

A lot of the Jap cars in Aus are built and imported from Thailand, not far to go at all.

#13 NZeder

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Posted 15 June 2010 - 02:38 PM

New cars are cheaper in Oz than in NZ and we have no import taxes (well that is what they tell us anyway) but grey JDM imports are cheaper here than Oz.

#14 sco_aus

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Posted 15 June 2010 - 02:40 PM

lol, fair enough

#15 260Coupe

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Posted 15 June 2010 - 03:02 PM

Not sure what the import laws are now Gav, as I have both a Pommy passport and an Aussie pass port I only had to own the car for 6 months to avoid the import duty, I still had to pay stamp duty and compliance duty and customs duty etc etc.........from memory it cost me around $3k AUD to land the car so it cost me around $9k all up.



#16 JP

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Posted 16 June 2010 - 10:20 AM

We have some of the highest import taxes in the world, it makes a huge difference, hence the much cheaper Falcadores etc


The tariffs have actually been slashed which in my opinion is a bad thing.

It's a good thing if you want to support the German/Thai/Japanese/Korean economy but not so good if you like to keep Australians employed.

If you do a quick search at the bureau of statistics the employment in the automotive sector is very large, larger than the mining sector we hear whinging so much recently. Somewhere like 60,000 Australians from memory. The argument is that import tariffs reduce competitiveness, but how can manufacturing in Australia be comptetitive if you and I are not willing to work for $3 a day like mentioned in this thread.

At the end of the day hobbyists like ourselves can restore our Japanese cars or whatever to no harm but there is no gain to be had in trashing the local industry to the mainstream Joe Smith and fleet. Having no local industry will drive ALL car prices up not to mention parts. In the new car market you simply cannot get the features at the pricepoint local cars offer and just because you own an import doesnt make local cars crap, just like if you have an SS ute it doesnt make Japanese cars plastic crap. However due to the cultural cringe your neighbour with his iPad, soy latte and 3 series will think he is of higher social standing even though he is just driving a base model german housewife shopping car. Marketing and the image of prestige is a funny thing.

So back on topic, I will use Japan as an argument to support my initial idea. We all have heard of Japaense Shaken or scheduled roadworthy tests. They are an excellent idea from the Japanese government to boost employment and productivity in the auto sector by making old cars expensive and there for unattractive to own/maintain. Dress it up as a safety or environmental act and there you go, strongest auto manufacturing in the world by making used cars worthless.


#17 DJRBrisbane

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Posted 23 September 2010 - 10:22 AM

The price differences between europe and Australia are a result of market conditions.  However, what must be asked, is does the car industry collude to make the prices higher.  If there is collusion then this must be against the law as its anticompetitive.  There is one very simple way to open up the market and this is to bring the Australian car compliance into line with the European standard (this is gradually happening).  European regulations are very tough and are beginning to be accepted as an international standard.  Once this occurs and the government opens the door to "grey imports" then we can simple buy our cars from the UK and have them shipped across. The european market is vast compared to ours thus prices are much lower than ours, also the european union will impose massive fines (and have) on car manufacturers who inflate prices in certain member countries (eg this was once the case in the UK). The government would not loose tax as 5% import duty, 10% GST and LCT would still be collected on the invoice price at the arrival port.  I think over the next few years with the stronger Aus currency people will begin to source more and more products from abroad, this will then force market prices lower in Australia and we will meet a happy equilibrium and we will all be paying less.  The car market is currently protected in Australia as you cannot import a car which is sold in volume in Australia.  You can however import low volume cars such as certain Japanese models, Aston Martins etc..  Interestingly you can actually buy a new Aston Martin, import it, pay your taxes etc all for what we pay for a Jag XF. 

In short accept Australia needs to accept the european international standards set by the United Nations Economic Community for Europe (UNECE).  We then need to allow grey imports of all compliant cars thus opening us to a global market of 100s of millions.  This won't destroy our dealer network as they will quickly jump in line and our car prices will suddenly fall by 30%+.  People will always prefer to buy from a dealer than abroad.

#18 Toecutter

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Posted 23 September 2010 - 08:50 PM

Yer something to be said about the stronger Aussie dollar. I bet all these cheap mustangs I've seen in the last couple of years must be a result of the last time the Aussie dollar hit 0.98 US. Most likely get a bit of a rush on grey imports when your buying at that price. And the dollar is at it again, 95.7 today, I wonder how high it will climb this time. Sounds like there is uncertainty in the US eceonomy again so who knows we might get on parr with the yanks!

This line of thinking can get me in trouble with the second half!  ::) :D

Sulio

#19 Scottz

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Posted 27 September 2010 - 08:10 AM

Have to agree with DJR.
Also if you think volume is small here and that's why prices are high, I disagree.
We are buying cars that are not made in Aus. They are made offshore for the Mass Produced Vehicle (MPV) market. That is, we are buying from makers who are supplying in big volumes all over the world, from strategic manufacturing locations. The manufacturers are moving into the global market and not staying close to their home shores. We are part of that large consumer volume.
I do agree that Aus industry is protected and that's why prices have been so high, but they are slowly coming down now that import tariffs have been progressively cut. Just compare any capacity motor in any make with its new price tag from 1990 and its current 2010 price tag. Along with all the standard features that are now included in the package. That's what competition does.
And if you think it is going to harm our home base manufacturers - Nope. They are also trying to move offshore and get into a global market. Commodores rebadged as Chevys and sold in the Middle East, just one example.
JP – If local Aus cars are great, then they should be able to compete. Not just on our shores but in EU, North America and Asia as well. If they’re getting beaten, maybe it’s because they are still short of the mark. Aus cars might be made for longevity, but in every survey I read, they always got a flogging for safety and security. Easiest car to break into is an Aus car. Ask any 15 year old. Aus cars only improved safety features when they got hurt by the imports. Don’t get me wrong. I’d love to see lots of Aus cars’ cruising the autobahn or east west USA. Imagine landing in Milan and the Avis rental car sign has a picture of an Aus car instead of a VW. Hooray! Imagine if our auto makers were the envy of the soy latte iPod twats. Beauty!
When you make a great product, it creates new markets and changes existing ones. Proof – zeds all over the world.
As for high rego, insurances and safety inspection costs in other countries. Well we will soon see that in Aus. It’s just bulls*%t from slack governments raising revenue under the guise of road safety, de-congesting traffic and reducing emissions. (Safety, Infrastructure, Environment). Reality is those governments (including ours) are not prepared to fix the issues, so it is easier to slog the consumer. “Let’s push some big costs onto the consumer so he is forced to slow down, because we are to slack to catch up”.
What we need to be a little careful of is raw material costs. As a big supplier of iron ore, aluminum, coal (energy) uranium (energy) gas (energy) and other raw materials, we directly affect prices for all the things we import into the country. Since most of our products are made offshore, from Aus raw materials, we pay the 'value added' margin. All costs roll down to the consumer. So if we keep pushing at this end, we pay at the other. It might just be that our greed changes the import market, so that we can keep buying cars! Think of it like this - If we double the price of the raw material, how much are we prepared to pay for a Nissan, Samsung, iPod, BMW, Westinghouse, or whatever? If prices were to soar upwards, would that break open the import doors? (Hung by our own rope).


#20 jonjo

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Posted 10 January 2011 - 05:55 PM

I think its rather shocking how car prices in Australia have remained so high for so long and nothing has been done about it.

European car manufacturers are offering sometimes up to twice the range of cars to the European market than to the Australian market.

Peugeot for example offer one sedan to Australia, the 407.  It has two trim levels and one engine size.

Peugeot offer 4 engine sizes and 3 trim levels just on this one model alone, to the UK market.  Peugeot also offer a heap of other models to the UK market that Australia is not privy to.

Citroen and the other European car manufacturers do the same thing.  The Australian car market only gets a small percentage of what foreign manufacturers put out there.  Which, could explain the pricing in itself.  By offering us less range we are paying more for limited choice.

Ford offer substantially more models to the UK market than they do to the Australian Market.  If Ford were to do the same in Australia, maybe, just maybe the Falcon wouldn't be as competitive any more.

Same with Holden. 

Many people choose a falcon or commodore simply because it was their family car whilst growing up or because it has this "Australian Icon" label attached to it.

the reality is, that the Australian Car market is way behind the rest of the world, not only on pricing, but technology.  We are only starting to see technology come into our domestic cars now that have been available on European cars for quite a few years now.

Does that mean that due to the pricing of cars in Australia that we are driving inferior cars, in a sense of technology based vehicles?  possibly so.

Given that we are on par with the U.S. dollar at present, why are car prices not changing?

The new Porsche 911 Carerra GTS costs $112,000 in the U.S.  $122,500 in the UK and $270,000 in Australia.

Why are we paying over twice as much as the U.S. and UK for this car?

I recall an article in a local paper about the cost of Used cars, and the Federal chamber of automotive industries spokesman, a Mr James Goodwin, stated that prices of used cars were fair because cars here lasted longer because of the less congested roads and the warmer climate.

Not so sure that is an adequate reason to charge, in some cases, double what the car is worth in the European market?

Until prices come down, through whatever means, we will not see much new European cars on our roads.





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