The Extra Price Charged For Cars In Australia

LoudPipes · 03-09-2014, 04:07 AM

Quote:

Driving The Status Quo

Date September 3, 2014
Michael Pascoe
Business Day contributing editor

We're well used to the "Australian premium" – the extra price charged for everything here from iTunes to Mercedes-Benz because, well, because the importers can. The early signs are that our "open for business" government is happy to keep it that way for the motor trade and against the best wishes of consumers.

And if patriotism is the first refuge of the scoundrel, safety is the motherhood claim for vehicle importers and fleet owners wanting Australians to continue to pay more than they should for a set of wheels.

Unless you were paying close attention, the release of the Productivity Commission's final report on Australia's automotive manufacturing industry came and went with little notice as events have long since overtaken its key recommendations. Ford, GM and Toyota didn't wait for the last rites before announcing funeral dates.

But tucked away in the 340 pages were a couple of vital recommendations that would affect the price of just about every car on the road and perhaps the viability of some large, expensive and politically well-connected vehicle dealerships.

When that power is lined up against consumers' best interests, it will be interesting to see who wins.

With manufacturing on the way out anyway, the key PC report recommendation is to drop the present stiff barriers on importing second-hand cars. For anyone who has ever drooled over the price of a two-year-old luxury motor in the UK, or has an inkling of what a four-year-old Japanese machine might be purchased for in Japan for export, that's sweet news.

As a cursory example, a quick squiz at Drive.com.au shows 2011 Merc E350 convertibles advertised for $75,000 to $95,000. Much the same vehicle is on autotrader.co.uk for £24,900 – say $44,400 in our money.

On the other hand, if you have an existing fleet of vehicles, that is a potential disaster. And you think your chariot has depreciated precipitously over the past couple of years, wait to see what happens if it has to compete with the cast-offs of Tokyo and London.

The immediate response from the federal government, no doubt after a quiet word or a million with the Federal Chamber of Automotive Industries, is a great deal of wariness about letting consumers enjoy a free trade price of cars instead of paying the "Australian premium".

In wording that could have come from a car importer, Industry Minister Ian Macfarlane said: (http://www.minister.industry.gov.au/...try-transition )

"No decision has been taken by the Australian government to reduce these restrictions (on second-hand imports) and the government has no intention of allowing Australia to become the dumping ground for other countries' old second-hand vehicles."

Never mind that the PC didn't recommend anything like that, suggesting imports should be limited to cars less than five years old and phasing the changes in to give fair warning of the disruption.

As you would expect of a trade body acting in its members' best interests, the FCAI claims right-hand-drive cars are actually cheaper in Australia than other markets (http://www.fcai.com.au/news/news/all...ment-pc-report ) and latched onto the safety angle.

The FCAI pushes the line that the greater number of new cars purchased in Australia in recent years has lowered the road toll through improved vehicle safety. It no doubt likes the reported (and misleading) angle that the average age of the New Zealand fleet increased from 11 years to 13 years after rules on grey imports were relaxed.

That's a case of comparing pineapples and kiwi fruit, but when you're lobbying for massive vested interests…

Minister Macfarlane said the issue would be considered as part of the government's review of the Motor Vehicle Standards Act 1989, "mindful of the need to maintain the highest safeguards for consumers and the impact of any changes on the domestic car retail market".

Which is where you can rely on the established local industry to chime in with claims of vastly superior Australian safety standards compared with, say, the UK and Japan. Hogwash.

The PC also recommends the government get its act together and "accelerate the harmonisation of Australian Design Rules with the United Nations Economic Commission for Europe (UNECE) Regulations and the mutual recognition of other appropriate vehicle standards.

"The Australian government and all state and territory governments should justify any existing and future jurisdictional deviations from UNECE regulations through comprehensive and independent cost benefit analyses."

In other words, stop fooling ourselves that the tiny Australian car market knows better than the rest of the developed world about what's a fair compromise between price and safety.

The Crikey website summed it up nicely thus:

"The potential consumer benefits of second-hand imported vehicles are significant and will help drive down the prices of all vehicles in the Australian vehicle market. In a country where the Treasurer claims that "poor people don't drive cars", consumers should not continue to be punished to help industries like the salary packaging sector."

Ah yes, the salary packagers – enormously successful in keeping the novated lease lurk before the election. Looks like the poor who insist on driving will just have to stick with their old, less-safe and less-fuel-efficient bangers.

Read more: http://www.smh.com.au/business/drivi...#ixzz3CB72mSUd

|Nate · 03-09-2014, 07:57 AM

Australia will follow the UK around like a loyal trained dog when it comes to road "safety" cameras, but apparently Australia is far superior in safety standards.

Does this mean I'll be seeing no more cameras or even some being taken away? I don't think so.

dom_105 · 03-09-2014, 09:31 AM

I'd like to see someone explain how having cheaper newer cars and, I would assume, cheaper new cars, is detrimental to safety, considering how we already follow the lead of the European Union in this area anyway?

What really are the differences between a UK delivered and an Aust delivered 2011 Merc E350?

Romulus · 03-09-2014, 10:03 AM

I'd like someone to explain why a Ford Ranger XLT 3.2 auto is $40,000 in Philippines, $54,000 drive-away price in WA.

Freight does not cost $14,000.

shifted · 03-09-2014, 10:34 AM

Taxes at importation would be something to consider.

Luxury car tax on top of that if that still exists.

It's like looking at the US market for Porsches and GT-Rs, we pay double if not more here for one brand new.

**GasoLane** · 03-09-2014, 10:43 AM

Quote:

Originally Posted by |Nate

Australia will follow the UK around like a loyal trained dog when it comes to road "safety" cameras, but apparently Australia is far superior in safety standards.

Does this mean I'll be seeing no more cameras or even some being taken away? I don't think so.

Not sure how this relates the OP

Al_Zhiemer · 03-09-2014, 11:24 AM

I don't know about the Philippines being the same as Malaysia but I discovered the same thing in Kula Lumpa while over there a while ago. It seems that if you buy a locally manufactured car there was bugger all tax on it but if you bought a vehicle that was built outside the country, the tax was massive, something like 200% of the cost of the vehicle. You know the people who have got cash over there because they all drive large import cars.

The problem with grey imports and I have personal experience on this, is that in the beginning to many people done the wrong thing and the government got the ***** and tightened up the regulations. You use to be able to import any car you wanted if it was over 15 years old, they closed this loop hole when the whole Fast & the Furious craze hit and people where importing and registering some pretty wild cars that clearly did not belong on the street or meet safety regulations. The problem being is that it was an unregulated market, any Tom, Dick or Harry could find a car they liked in Japan, import it, register it and drive away. It flooded the market for those of us who had been doing the right thing for many years and making a nice little profit out of it. Some of us even partitioned the government for more regulation as to the dangers going on but in the end, all the did was shut the import business down. One of the main reasons they modified what you can and can't import was because the local manufacturers and foriegn vehicle dealerships didn't want it to interfere with their struggling vehicle sales but it hasn't helped, Ford, Holden and Toyota are still pulling out of local manufacturing and Australians are still whinging about why we can't import the same car with more standard features for cheaper than what the manufacturer is selling the base model for here.

As much as I think it stinks that all three manufacturers are closing up shop and particularly about both Ford and Holden, it is a part of Australian heritage and history, the good old days of my Ford is better than your Holden is dieing. No matter your view on Holden, we should be all standing back, giving them both a big salute and thank them for the years of epic battles and good times. But on the flip side, I'm also a little bit glad that they are going as now, we might now start getting true competition in the vehicle market place.

So what sort of things are different between countries vehicle regulations, bugger all, its bull****... Bringing in JDM (Japanese Domestic Market) vehicles there is very little that changes and stupid stuff. My experience was with GTR Skylines, some of the stupid stuff I would have to fit to them are as follows...

* Fit anchor points to the rear parcel shelf for fitment of baby seats (It's a two door sports car that the rear seat is like bucket seats and there is no way possible that you could in any way shape or form securely place a baby seat/capsule in there.

* Brakes!!! Brakes were a killer, $2500 a set if they didn't pass a roadworthy inspection because they had to be genuine items and not aftermarket.

*Fuel filler had to be modified to fit the stupid little door inside the filling point because JDM vehicle don't have it. Mind you now on the newer cars the fuel door is also the fuel cap in newer vehicles.

* Change the tyres as apparently its a risk that the tyres it rolled in to Aus on could be contaminated and destroy our eco system. Yet just about every tyre we roll on is manufactured overseas and at one stage it was a very lucrative business importing secondhand tyres from Japan and Selling here.

* Re-gas the air conditioning unit as you can't transport the vehicles with anything that is holding some form of pressure.

But honestly, that was about the only major things that had to be modified to meet Aus design rules and regulations.

I have said for many years that the vehicle build quality and prices of both Ford and Holden compared to the rest of the world is rubbish. The politicians don't want us to become the dumping ground of the worlds secondhand cars, to late, we are already the world's dumping ground for crap, out of date new vehicles. So they could at least give us back the freedom of choosing what crap we want to drive again. Compared to standard equipment fitted to the overseas market, we have to pay for every little luxury we want. Manufactures have known that for many years our vehicle selection was limited and expensive, just the way they liked it so they will continue to serve us crap in a cone and call it ice cream.

Just my opinion though

|Nate · 03-09-2014, 11:24 AM

Quote:

Originally Posted by GasOLane

Not sure how this relates the OP

Quote:

Which is where you can rely on the established local industry to chime in with claims of vastly superior Australian safety standards compared with, say, the UK and Japan. Hogwash.

I just found it funny that they are correlating our "superior" safety standards with UK's, yet we're always turning towards the UK to scout out the latest road "safety" cameras because our roads are not safe enough already.

My fault for not quoting that line in my original post.

Franco Cozzo · 03-09-2014, 12:05 PM

Don't worry guys we might be getting Parallel imports for cars:

http://www.carsales.com.au/news/para...t-a-cost-45767

Mercedes Benz is trying to talk the government out of it, because they KNOW they overprice their cars by heaps here.

We've got no automotive manufacturing industry come 2016, so why shouldn't the importers be forced to compete?

In my opinion since we won't be making cars we shouldn't have to meet ADRs anymore or pay import tarrifs, we already use Euro standards for emissions so why can't we use Euro/Jap design rules also?

It would make cars cheaper as their cars aren't being modified to meet some specific requirements set by us.

Al_Zhiemer · 03-09-2014, 01:10 PM

The JDM manufacturers have been leaps and bounds ahead of most countries for years when it comes to vehicle standards and yes Mercedes like most of the European manufactured cars know they have a market that they can over charge on every single luxury item for, of course they aren't going to want it to change and fight for it to stay the same... It all comes back to the old days when Aus was considered at the ends of the earth and the cost involved in getting anything here was massive but in today's world, everything is just at the click of a button and can be sourced from anywhere in the world. While manufacturers are living in the stone age believing that the Aus public are none the wiser, they will continue there push to keep it that way... It is up to us also to say enough is enough and start pushing for more freedom in this area now that we don't have to worry about the local market... No matter what, the manufacturer's are still going to make car sales because whether you buy the car in Aus or overseas, someone, somewhere has built that car and been paid for it... And if manufacturer's where smart, they would already be planning on opening their market by way of special order and capitalize on the new market that has been opened up...

Import Tax will always stay in some form as no matter what, you get slugged with an import tax even when doing it privately... As a general rule, including the shipping costs, you can expect to pay around the 25% in tax's on top of what the vehicle has cost you...

But yes I agree, if we no longer have vehicle manufacturing here in Australia then they should free up the market again just like they did in NZ... Man, some of the cars you can get there and prices that are thousands of dollars cheaper than here in Aus... You've been able to buy a RHD converted Mustang in NZ for years about about 20 - 30,000 dollars cheaper than here in Aus... The convertors know they have a broader market to compete against so there for have to keep the costs down...

Think about, new Ford Raptor in the USA, about the $55,000 mark... Add around $3000 for shipping at the max, that's $58,000... Current selling price of a RHD Raptor here in Aus, $110,000 plus and closer to $150,000... You're trying to tell me that it cost $90,000 to do that conversion?? One conversion company over here in WA quoted me between $15,000 - $22,500 just to do the conversion on my 89 F150... I laughed at him, I have all the parts he needs to do the job and all I wanted done was the firewall swapped out and the Extra Cab cabin fitted to the RHD chassis... This is the sort of mentality we are dealing with... Small turn over for large rediculous profit margin rather than looking at the bigger picture of smaller profit margin can lead to greater sales, rather than making things more affordable to the market, they would rather do less work for more money and then wonder why their business collapses... The mentality of the automotive industry in general needs to change and anyone with the knowledge, the finacial backing and the ability to do so can open up on this market and make a killing...

Look at places like SSS Auto Parts and Atlas Parts and Panels... Ok, you might be buying a none genuine part but lets face it, are you going to go to Nissan and pay $600 for the headlight in your new Patrol or go buy an aftermarket one for $150... Yes sometimes the fit is not as exact but in most cases I've never had that much of an issue with them... I know for a fact these guys are making a killing because they are supplying a product at prices people can afford rather than having to go to the dealership to get the part and walk out bandy legged and a sore ****...

Holden have fought against these companies from reproducing there products because they know that parts sales for their vehicles is massively important... A new Clubsport LED tail light use to be around the $1200 for one tail light... For a bloody dirty old Commodore, rediculous...

Seriously, vehicle manufacture's/suppliers to the Australian market are ****ting themselves both manufacturers and conversion companies, they know that if the regulations change that their strangle hold on the Aus market is going to collapse and the Aus public are going to start demanding more for their money because they now know they have other options to choose from...

Also opening up the vehicle regulations on imports is also going to create growth in other areas because one of the main draw backs of imported cars is sourcing parts for them, Parts suppliers are going to start popping up all over the place because there is going to be a need to supply aftermarket parts and genuine parts that the suppliers here just don't have the access to or the knowledge of how to get their hands on...

Regards

Romulus · 03-09-2014, 01:23 PM

The cost of manufacturing in Australia is too expensive. We can't compete on an international level. That said, why are we being ripped off on imported products?

Interesting times ahead post auto manufacturing from an economic perspective.

**GasoLane** · 03-09-2014, 02:04 PM

Quote:

Originally Posted by F6 Concorde

That said, why are we being ripped off on imported products?

A few years ago I was listening an ABC Radio interview with an imported car manufacturer (Merc or BMW, not sure) and he was asked why they are much dearer here than Europe.

He basically said that they price their cars according to the Australian marketplace requirements.

Which I took to be management speak for, 'We charge more because we can'.

Al_Zhiemer · 03-09-2014, 02:08 PM

The thing is that the Manufacturing dealerships are always and will always be here with a large hand in the pie... Volkswagon are beginning to sync their Auto Transmissions with the Engine, meaning that if you blow a gearbox, you can not fit up a secondhand gearbox... You will have no choice but to either go back to the dealership and purchase a new box from them and have it all linked to your system or maybe repaired by a Transmission specialist... I'm guessing this is also reversible in the sense that if you blow an engine, you will have no choice but to take it to the dealership for a replacement/repair... In the end, we may get a Parallel Imports Program but you can bet your bottom dollar that your imported Golf is going to get slugged for any dealership repairs when compared to a locally sourced model... And then you will see specialty workshops pop up all over the place by previous dealer technicians to cash in and I am not looking forward to the day I have to take a vehicle to one of those mechanics for repairs :-( About then I'll give up driving I think LOL

Regards

LoudPipes · 03-09-2014, 03:45 PM

I don’t know the ins and outs of this subject or even how accurate this article is but I do see an opportunity for Senator Ricky Muir to take up this cause and work towards providing cheaper vehicles for the Australian motoring public.

While the current Government needs his support to pass its legislation, he has bargaining strength he can use to succeed with his own agenda and not just appear to be a puppet for the PUP Party.

Here’s Muir’s contact details.

We should all email him to request he look into this matter and ask your family and friends to do the same.

http://www.aph.gov.au/Senators_and_Members/Parliamentarian?MPID=250024

Romulus · 03-09-2014, 03:53 PM

Quote:

Originally Posted by GasOLane

A few years ago I was listening an ABC Radio interview with an imported car manufacturer (Merc or BMW, not sure) and he was asked why they are much dearer here than Europe.

He basically said that they price their cars according to the Australian marketplace requirements.

Which I took to be management speak for, 'We charge more because we can'.

Correct. Which is why I pay $1.00 for a Corona in Cebu and $1.00 for a pack of 20 Marlboro cigarettes to accompany my Corona beer.

This is a great country we live in, I think.

zilo · 03-09-2014, 05:24 PM

The gravy train ride for the two largest American car makers is nearing an end.

They've been laughing at the prices we've paid for Commodores and Falcons since our exchange rate has been near parity..

40k buys you a bloody decent car in the US.

The FOMOCO · 03-09-2014, 05:44 PM

I can't work out why we aren't going to LHD i have 2 LHD cars it will make the cars cheaper for a start and its no big deal to drive one hopefully there are good times ahead for Australian consumers when buying a car and not being overcharged like we always have been

Franco Cozzo · 03-09-2014, 05:49 PM

Quote:

Originally Posted by The FOMOCO

I can't work out why we aren't going to LHD i have 2 LHD cars it will make the cars cheaper for a start and its no big deal to drive one hopefully there are good times ahead for Australian consumers when buying a car and not being overcharged like we always have been

I don't get why you can't drive a modern LHD car on the roads, but if its 30 years or older, no worries go ahead?

**Falcon Coupe** · 03-09-2014, 06:50 PM

Quote:

Originally Posted by Big Damo

I don't get why you can't drive a modern LHD car on the roads, but if its 30 years or older, no worries go ahead?

Try floating into the oncoming lane a little to see if it's safe for overtaking!...A bunch of every day commuter LHD's would cause carnage.

I assume the governing body figure's it's ok for a Sunday cruiser hence the ability to register them.

FPV8U · 03-09-2014, 07:44 PM

Pretty simple really, if there is no industry left to protect then any related taxes should be dropped.

Of course we are always going to pay tax on a new purchase but Import taxes when we no longer have local options to select from is rubbish.

The FOMOCO · 03-09-2014, 07:46 PM

Quote:

Originally Posted by Falcon Coupe

Try floating into the oncoming lane a little to see if it's safe for overtaking!...A bunch of every day commuter LHD's would cause carnage.

I assume the governing body figure's it's ok for a Sunday cruiser hence the ability to register them.

Thats the only drawback i have ever found in many years but it can be done, you just need a little patience if your driving alone and want to overtake say a caravan or truck on single laned roads

danzvtil · 03-09-2014, 07:56 PM

We have a higher capacity to pay in this country, so they charge more.
New car prices have been dropping over the last few years with each model cheaper than the last-Mercedes included.
Prestige cash prices hardly matter, as they are all on hire purchase to businesses. If they can afford the monthly payment, then its ok.

Sioso · 03-09-2014, 08:37 PM

Quote:

Originally Posted by The FOMOCO

Thats the only drawback i have ever found in many years but it can be done, you just need a little patience if your driving alone and want to overtake say a caravan or truck on single laned roads

And a lot less chance of gutter rash on your rims when parking in a LHD vehicle.

Trump · 03-09-2014, 08:42 PM

Two words explain why the Australia Tax exists: captive market. Remove the mechanisms that allow the conditions for a captive market to thrive, problem solved.

csv8 · 03-09-2014, 09:05 PM

Fusion Hybrid Titanium is $38k USA...!!!! Here, if it ever came here, would be $60k+

xtremerus · 03-09-2014, 09:22 PM

Quote:

Originally Posted by FPV8U

Pretty simple really, if there is no industry left to protect then any related taxes should be dropped.

Of course we are always going to pay tax on a new purchase but Import taxes when we no longer have local options to select from is rubbish.

That tax is only about 5% now, thanks to the Button plan years ago.
That component will mean SFA to an overall price reduction of new cars.

Franco Cozzo · 03-09-2014, 10:55 PM

Quote:

Originally Posted by Falcon Coupe

Try floating into the oncoming lane a little to see if it's safe for overtaking!...A bunch of every day commuter LHD's would cause carnage.

I assume the governing body figure's it's ok for a Sunday cruiser hence the ability to register them.

Then you don't overtake

To me the horror would be the Maccas drive through

The cynic in me loves how some business spruik "free market economy" until they realise this time they're in the firing line.

Then its unfair and they want protection.

Pedro · 03-09-2014, 11:05 PM

And it's not just cars guys.
I travel to USA on a semi- regular basis and for some years now have only bought my clothes there ... Levi jeans $39.95, pack of 4 cotton singlets $12.00, cotton shirts $20, dress leather shoes $70.00, suede jacket $50.00, etc. etc. ... all items top quality.
Last time over I bought a new Braun shaver for $82 that retails here for $325.
My wife stocks up on name brand cosmetics for around 1/4 the price asked here.
The quality of fresh food is outstanding and priced way below what we pay here.
And so it goes on.....

Franco Cozzo · 03-09-2014, 11:11 PM

Caterpillar boots are a good example, American brand, made in China, 1/3rd of the price from Amazon USA even though China is closer to Australia

Romulus · 03-09-2014, 11:12 PM

Quote:

Originally Posted by Loud_Noises

Two words explain why the Australia Tax exists: captive market. Remove the mechanisms that allow the conditions for a captive market to thrive, problem solved.

It's bizarre indeed that a country that espouses so much consumer protection and free market competition mechanisms incurs such high prices for most goods and services compared to other countries.

You mention captive market. In the context of motor vehicles, Australians have the largest choice of brand/model variant than any other market in the world. IIRC you can select a different brand/model variant for each day in the year. No other market in the world has this.

So, why are we paying so much?