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Why are cars so expensive in Australia?

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Very interesting Phantom Guy, I was looking at ways to import cars to Australia and sell them on for profit (as a business) but in light of your recent post it this seems like it won't be easily done.

 

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.

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Phantom,

 

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.

 

;) John

 

 

 

 

 

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Good points in there - NZ lost a lot more when the car manufacturing went away. A large part of the content was also local manufactured ie seats, exhausts and tyres...well all those industries we away along with the auto assembly plants. Very Very Sad indeed. Look at NZ now - going to hell in a hand cart and fast. Our Government talk about bridging the wage gap between NZ and OZ to stop the mass exit's but the gap is too large and last year wage earners here got an average of 1.7% increase vs 4% inflation - that is not even keeping up let along trying to catch up with Tassie let along the rest of OZ for wage equality.

 

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.

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Hmmmmm....did this topic die a natural death, or was it choked?

 

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? ;D

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The thing is that old cars particularly from the dryer states such as SA have little rust because we don't have to put salt on the roads as in Briton.It is not unusual for a restored British sports car to need an entirely new body. So if your classic car is kept out of the sun and rain it will look good for years and so hold its value.

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http://www.carsguide.com.au/news-and-reviews/car-news/why_cars_cost_more_here_than_in_the_us

 

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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