Why are cars so expensive in Australia?
Posted 15 January 2011 - 07:13 AM
Posted 04 February 2011 - 11:16 AM
The Luxury Car Import Tax in Aust applies from ~$57,466.00 and is 33% (Note: there are differences for Fuel Efficient Cars - Whatever that is). http://www.ato.gov.a...3394072010.pdf And this doesn't include GST which I assume applies on top of the Luxury Car Tax. This is why most cars in most other countries are significantly cheaper.
The average annual salary in 1972 was approx $4,700!! (Average weekly wage * 52 weeks http://www.ausstats....020_JUN1972.pdf ) A new 240Z was priced in Oz at ~$5,200.00 http://www.drive.com...=2D COUPE&pg=1 Which means it was more than a year’s salary, in fact 1.1 times average annual salary. Current annual salary is ~$67,000 http://www.abs.gov.a....nsf/mf/6302.0 and a new 370Z sells for ~$68,000 RRP. Meaning, if you take out the increases in luxury car import tax over the years, car prices from the manufactures have actually come down relative to annual incomes. In other words, cars are cheaper than they were, except the government is taking a bigger slice of the pie (how unusual...)
NOTE: I realise this is simplistic view, but the general principles are correct. Especially when you consider the gains in efficiency the car manufacturers have achieved in the last 40 years.
Posted 17 February 2011 - 03:35 PM
All this talk above import tariffs etc ... just misses the mark. This topic has been raised in forums for eons. If you want to get rid of the Ozzie rip off in car prices you have to get the 1989 Act of Parliament (and it regulations and regular "tightening" amendments which have taken place as late as Nov 2010), you have to get a large public groundswell to force the Australian Government to change its laws administered by the Dept of Infrastructure, which create monopoly importers and is decidedly anti-competitive (strange when we espouse "free trade" on the world stage at Gatt etc).
In Short ... duty on imported cards is 10% then GST is 10% - unless you fall into the Luxury Car Tax rate of 33% (I think it still is) - but the figure set in about 1990 has never been indexed so instead of being now about $200,00 it is still about $60,000. And of course IF the cards were priced here at UK/USA/Japan competitive prices many quality cars would still not reach the threshold.
We all hear Charlie Harper on Two and Half men complaint about his $80,000 Mercedes (about $200,000 here) and many of us have had personal experience, or that or friends of relatives overseas, who have purchased vehicle at half or less than they sell for in Australia. My own examples are - a cousin in UK just purchased a brand new RH drive Mercedes E350Cdi for 36,000 pounds (=A$55,000), the same LH drive vehicle in USA sells for US$49,000 (say A$50,000) and the Australian price is A$142,000. Even in NZ the price is NZ$140,00 which on currency conversion is 25% cheaper than Australia. 250% higher!!!!
Other examples are Nissan GT-R base model - LH drive US$84,000, RH drive in UK 54,000 pounds, but in Australia is A$160,000. 250% higher!!!
Again, in the lower end, BMC 129Coupe - in UK 19,000 pounds (= A$30,000), in the US $29,000 (= A$29,000), but go to buy one in Australia and the price is A$62,000. 210% higher!!!. And on and on ......
The problem here is that in almost every car brand and model, the Australia Government has allowed the manufacturer or master importer EXCLUSIVE IMPORTING RIGHTS. And so NO ONE - i.e NO ONE, not even a private person wishing to bring in one vehicle, can import that vehicle unless -
(a) you have lived overseas for 12 months and have owned the vehicle for 12 months, and have lived in the country where it is garaged for 46 weeks of that time; OR
(b) you find a make and model which has NEVER been imported in Australia nor has been on the import approval list for the manufacturer/master dealer; and then either -
(i) apply to have that vehicle make and model added to the SEV schedule (takes time and money and it must meet Aust design Rules but they will not require a vehicle to crash test) [SEV = Sports Enthuisist Vehicle); OR
(ii) Apply for a Low Volume Import licence allowing you to import max 100 vehicles pa - but licence is expensive and so is the process to meet ADR (funny that our rules/standards would be "so high" that Benz and others cannot automatically meet it, yet Great Wall can meet it. Mmmm!)
See, the upshot of this is that Mercedes, Honda, Audi, etc etc etc just have to request their vehicles put on the their Import Licence, provide documentation such as to meet ADR, an if requested provide one vehicle (minimal cost to them) for a destructive crash test, and agree to import a minimum of 3000 vehicles pa and hey presto! they get a "single import licence" which means NO ONE else can import that vehicle whatsoever. Then they have it made - they can name their price because they is no way even one vehicle from another market - NEW or USED i.e manufactured since 1989 - can get into Australia or get onto the market at a price below theirs (or in the case of the USED vehicles below they inflated used car prices here - inflated because the new prices are 250% inflated also - so it flows through.
The history of this fiasco ..... originally in the mid 1980s the Labor Government adopted a reducing protection (i.e. Import duties) on motor vehicles - Called the Button Plan - conceived and managed by Senator John Button - to force GMH and Ford to get more efficient and more competitive. The duty was to be slowly reduced over 10 years from 60% I think it was - to 5%. When it got down to about 15% the "big boys" here threatened to pull out of Australia and put 30,000 workers and another 30,000 subcontractor workers out od a job and on the dole. The Government relented and the duty drop stopped eventually at 10%. Later a clamp down by the Government on the "fat cats" buying European instead of Australia "luxury?" models brought in a 33% Luxury car tax at around $60,000. You could get quite a nice Porche for a little over that at that time. Of course it didn't stop the well-off from buying BMWs instead Caprices and LTDs. And of course that figure was NEVER indexed so just became a another tax-grab by the Australian Government.
Then in 1989, still under threat of Ford and GMH walking out, a new idea was born - restrict import of overseas vehicles to just one corporation, who could then price their products to Australians at much higher prices (with fat profits) having regard to the high prices for locally manufactured vehicles and the fact that vehicles sold by them into other markets (at fair prices) could never come in and "compete" here with their inflated products.
SWEET DEAL FOR ALL - Except the Australia consumer who again has has wallet ripped from his pocket. Trouble is this time the "rip off margins are being made by the overseas manufacturers (as well as Ford and GMH to some extent) and a huge slab of our family (and business) budget (as in the case of exhorbidant fuel prices) is being shipped to overseas balance sheets and bank account. I hate to say it but high import duties together with a "free" import market would mean the "rip off' money stayed in Australia with our Government.
Financial Impact on Australia ... we all know that the family vehicle is the 2nd biggest purchase we make (and it is repeated every 4-5 years on average) and whilst not every imported make and model is 250% higher than in most other 1st world countries, on avergae we are paying A$20,000 more than we need to for the average motor vehicle because of the "single import licence" scam - protected by government. Think about this - 1 million vehicles are sold in Australia every year ( more would be if prices we "normal" and then we could also get "young people out of "death-traps" and help to reduce the road toll). That means every years we as Australian individuals and businesses are paying $20 billion dollars more than we need to. And this has been going on for 22 years - is that over $400 billion we have wasted in lining the pockets of overseas "pirates"? But looking forward - If we took that for just two years that $40 billion could pay $1million to each of the auto workers and say 1/2 of the subcontractors who could not be employed in other than supplying the motor industry with components, and just as happened with uncompetitive textile clotheing footware, furnitur etc etc manufacturing, scrap the local car manufacturing as they did in the UK where prices are about on par with US prices. THEN FROM 2013 WE COULD BE PAYING THE SAME PRICES AS THE USA, IK ETC. OR NEAR ENOUGH.
So, what do you other forum members think about this situation and the solutions? Stop complaining about this and band together with friends and family to lobby your fedceral member on this important and expensive problem that we Aussies just cannot afford to let go on.
Posted 17 February 2011 - 03:39 PM
Posted 17 February 2011 - 04:23 PM
You were only yelling when in CAPITALS!!!
Sorry Guys for the bold text - so much - I only intended a few odd sentences in BOLD but have slipped up. Again my apologies as I was not intending to yell at you. this subject is too importna to be ignored for lousy format. :-)
Posted 17 February 2011 - 08:27 PM
I do have a personal vehicle that I purchased here that I intend to import into Australia. After showing that I've owned it for at least 12 months and lived in Ireland for that time.
However I can't see how I could import some of the cheap cars I see over here (Audi's, BMW's, Mercedes etc..) to Australia without significant expense so the idea is looking rather tattered now.
Posted 17 February 2011 - 08:44 PM
Your historical points are all correct, the Button plan however went much further than just the superficial cost of motor vehicles, what Button uncovered was correct, the main point being that Australian infrastructure within the manufacturing sectors, not only the automotive sector had steadily declined from a high point in the 60's to a basket case in 1984.
The catch phrase of 1984 became rationalisation, it reverberated right down from the boardrooms of corporate Australia to the shop floor, the inevitable was that by 1989 Australia was heading for Keatings Banana republic recession, the one we had to have as he coined.
Whats does this have to do with the price of a motor vehicle, well we should also take into account that the average wage back in 1988, GDP and overall cost of goods be they locally produced or imported which where all over the shop relative to each other.
Lets do a small comparison here going back even before Button and which illustrates why it got to a banana state in 1989.
In 1982, the average weekly wage was $317.16 and a XE Ford falcon GL sedan in hermitage with power steering and aircon options in an auto cost $23,000.
In 2010, the average weekly wage was approximately $1243.10, A new FG XT Falcon with all the XE features PLUS PLUS PLUS $40,290.
Now some imported vehicles were reasonably priced looking in retrospect, however you have to look at it with respect to the average wage of 1982.
The 2010 average weekly wage is 380% higher than 1982 levels, however average Joe Blogs Falcon is less than 50% higher, and what are you actually getting as far as bang for buck in comparison.
I'm am not of the left wing political persuasion, however Button was right and both sides of politics knew it, if Australia hadn't been dragged by the neck kicking and screaming and threatening to revolt as you illustrated, the motor industry would have perished in this country last decade if not sooner, look what happened in NZ, All the majors pulled the plug, .Australians were becoming savvy in what they expected for their hard earned dollar, and today's FG falcon wouldn't have been half the car if at all had it not been for the thumb screws put upon it.
But it wasn't just the auto industry, it was the case across the board, how do I know this, well first I lived through it, and secondly I completed a degree in Industrial Design at Prahran Institute one of only 2 institutions in Vic with only 80 entry level places per year, I worked towards getting into auto design, finished my course and started looking for work, there wasn't any, I even spoke to then Ford Australia President Bill Dix and he told me to ring him the following Monday, all I wanted to do was work in the clay modelling department, for NOTHING, well luck wasn't on my side, he was replaced as President on the Friday, and my dream died.
At that stage all Aussie design work was either done by a few very lucky Aussie's who went OS to work on new models or design teams were flown in to work on new scope's, trying to crack into Ford or Holden was impossible.
Whats changed, Australian designers and engineers working for the big 2 are now extremely respected, just look at Holdens work for parent GM, and don't discount Ford, the only reason Falcon isn't in the U.S. is because it was just to good, Ford U.S. had nothing like it and the Ford Crown Victoria which supplied U.S. police forces was at risk, and that meant heavy job loses, so Falcon after proving itself in Turbo version tests over there and blowing away Police buyers and Ford management was as still born proposition, what they didn't think about was Holden and it's Statesman, RWD Holden with a Chev, now Ford is in panic mode in the U.S. !
I digress, so, We still have a motor industry here, and a damn good one, never ever underestimate a Commodore or Falcon, if you remember Holdens advertising campaign, "VE Holdens Billion Dollar Baby" you'd think that's how much VE cost to develop, NOP, try $600 Mil, and FG around $500 Mil, so where did the Holden Execs blow the other $400 Mil you ask, well it went to tooling for Holdens export cars to the U.S. and U.A.E. and it wasn't Holdens money, it was GM"s U.S.A. that's why all the cars were badged as Chevy Lumina's, now imagine if FORD U.S.A. had kicked bucks in for tooling of the FG also, Hmmmmmmmmmm think falcon would have also become a world car, and maybe that's what Jack Nassar was hoping back in 1999 with AU before he totally F*cked it up in the final design sign off and then went global with Ford U.S.A.'s $13 Billion surplus buying up Jag Volvo and the rest.
The moral of this story, world manufacturing has become leaner and cheaper, Toyota's concept to roll out time is down to less than 18 months, Ford and Holden still work on a 5 year scale, but what you get for the money is still well worth it, if Buttons plan hadn't been adopted, we wouldn't have a Ford nor Holden here period, well maybe but they would be pushing FWD V8's in our faces imported from OS, and if you want to compare apples with apples, well drive a Vette and then a HSV or a Ford GT and a Mustang GT.
And finally, the cost of imported cars is also dictated to productions costs, we are after all a RHD country along with Britian, Japan, NZ, South Africa, Hong Kong from memory and ? Um ! and all you need to look at is what happened in the UK over the past few years where RHD vehicles sat around for months in yards devaluing unsold because the market was dead and then ask yourself, did Benz BMW Audi etc really think that the return on investment was worth it, OH hang on Australia, now that's where we can sell them !
Sorry that wasn't meant to be sarcastic.
Anyhow, I will just slowly turn around and leave and you canall take aim with the knives.
Posted 17 February 2011 - 10:10 PM
Our min wage went up to $13.50 the other day and with the current exchange rate the min is $20 of our funny money over there. The government talk about how properties prices are lower as is personal income tax - who gives a rats arse - that is just part of the TAX we pay factor in G-S-T (Grab Snatch and Take), local council taxes etc it BS. I lived in VIC and I have earned the same $$ valve on both side of the tasman and the personal income TAX might be lower in this country but they kick in at different levels so I had more cash in the hand in Oz that in NZ for the same salary. The cost of living was about the same back then - $2.50 for pack of briskets in AUD in Oz and $2.50 NZD in NZ. But like I said less cash in hand in NZ for that lower income TAX....BS.
So as pointed out NZ cars might be 25% less than the same euro car in Oz but with the lower wages etc = same if not more. As for the Ozzie made cars....well I did the numbers once it cost $15K extra to ship a Falcon or Commodore to NZ and sell than to WA (same distance - ok so some water not a large bit of dirt) when you compare the sale prices WTF - so we have less wages and pay more for the Ozzie made cars.
Anyway rant over. And in case you ask why did I come back to NZ - well my Zed was here is that good enough? + the other half wanted to start a family and if was to be part of it - I had to drag my sorry arse back too.
Posted 23 February 2013 - 12:50 PM
Lets try a jump-start;
1. All vehicle sales are down due to GFC (if you believe it) and general appathy in the public. People are holding onto their hard earned $$ waiting to see what the government is going to shaft them with next.
2. March 2011 Tsunami put a dent in Japan's manufacturing and slowed down the supply chain. (14 months ago I was wanting to buy a Toyota 4x4 , but was told 6 months wait!). But don't under estimate their ability to rebound.
3. There has been a bit of noise in the government about changing the luxury car tax, but what ever the change might be, it is still going to screw us. Example, it may get raised for cars >$80,000 but the tax might also go up to 40%. Simply what is given in one hand will be taken from the other. But really - who cares, we just want affordable & reliable daily drivers, no matter what the badge on the bonnet is.
4. Talk continues on reducing import tarrifs further. 14 months ago while shopping around for a new ute I checked out the 2011 Ford Falcon utes. Very nice cars and the prices were really good, supposedly because the new 2012 models were about to be released so Ford discounted the 2011 models. I bought a 6cyl 'tick all boxes' Falcon ute in 2001 and the 2011 6cyl 'tick all boxes' ute was cheaper and had more gear n go. While talking to the Ford sales bloke I found out he had been a Ford Sales Manager for 22 years. He also told me the new models could be the last "made in Oz" Fords we see. I was a bit shocked, but he basically said it was 50/50 if Ford continued making cars in Oz. I guess we are still waiting to see if that happens.
5. When it suits us we want global prices, but we still want manufacturing jobs to stay in Oz. Can we really get both?
6. If car prices dropped 20% how many more cars would be on the road? 5% more or 50% more? Would the existing infrastructure cope? You can buy a car in a day (or 6 months if you want to order a Toyota 4x4), but a bridge or road takes a year or 2. I think we better get some serious dollars pumped into the transport infrastucture before we put more wheels on it.
7. A few writers have already noted that car prices have dropped in comparison with average p.a. wage and salary. But it has taken 20+ years. Do we wait another 20 years or can we speed it up a little?
8. Have you seen prices for car parts go down, similar to car retail prices? Yes and No. I still can't believe what decent tyres cost here in Oz !
Incidentally a total of 1,939,854,524 people, which comprises 34% of the world's population, resides in left-driving countries, and a total of 3,824,562,670, or 66%, resides in right-driving countries.
Are we going the right way?
Posted 24 February 2013 - 09:38 AM
Posted 24 February 2013 - 05:13 PM
It's an old article but still 100% relevant. It should also be noted that out of the 13 countries that can design, engineer and manufacture a car from start to finish, Australia's automotive industry is the LEAST subsidised, has the lowest import tariffs and taxes. For some reason Australian commerce is obsessed with a free market, when in reality it makes us a pushover globally as nobody else wants to play by the same rules. It's amazing that we signed a free trade agreement with Thailand and before the ink dried on the agreement they introduced a 40% tariff on imported vehicles of over 3.0l capacity. I wonder who they were trying to shut out?
It's a real shame to say that local manufacturing is going to die a slow death, as the Falcodores are world class cars hamstrung by a poor legacy and brand snobbery.
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