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Why do we pay more for cars

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    The Mazda6 is cheaper than the Camry in the US but dearer than it in Australia ($33,460 versus $22,968).

Australian buyers pay more for cars than those in the US.

New-car prices are at record lows and driving a sales boom, but a survey by News Limited has found Australians still pay more than buyers in the USA. In some cases the prices are more than double.

The Nissan Pulsar and Toyota Corolla have both limboed to $19,990 locally in the past six months -- the same price they were 10 years ago. But the same models in North America start at between $16,140 and $17,850 respectively. The Australian dollar has had parity with the US dollar for two years.

Australia’s top-selling car, the Mazda3, has a recommended retail price of $20,330 locally (before on-road costs are added) but the same car starts at $18,370 in North America.

The gap widens as prices rise. A Toyota Camry starts from $30,490 locally but the same model is $24,460 in the USA.

Mazda’s mid-size sedan, the Mazda6, has an even greater price disparity -- more than $10,000. It’s cheaper than the Camry in the US but dearer than it in Australia ($33,460 versus $22,968).

Mazda Australia spokesman Steve Maciver said standard equipment varies from country to country: "We look at how we compare to our rivals and we are happy with our prices. We believe we offer good value for money."

More glaring examples begin in the $50,000 price bracket. A BMW 320i sedan in Australia costs $58,600 (just below the Luxury Car Tax threshold) but in the USA can be had for the same money as a Holden Commodore: $35,805. The Mercedes-Benz C-Class sedan has a greater disparity: $67,900 here versus $35,350 there.

The car industry argues new-car prices are higher in Australia because it costs more to recoup the development costs of right-hand-drive cars given that the markets are smaller.

“Volume is king and more cars are sold in left-hand-drive countries than in right-hand-drive countries, so the customer has to pay,” said Mercedes-Benz Australia spokesman David McCarthy. “We have worked hard to make our cars as affordable as possible, and put more equipment in them, and still make a profit.”

McCarthy said shipping costs are also higher because the distance is greater and the car carriers mostly leave Australia empty: “it’s a one-way trip”. The cost of financing vehicle orders also ties up more money because of the longer delivery time from Europe. “We as a wholesaler pay for each car as it leaves the factory gate, then it’s in transit for up to three months before the customer pays for it.”

German sportscar maker Porsche last week slashed prices across its range – by as much as $36,000 in some cases. But Australians still pay more than double than those in the USA for one of its speed machines.

A Porsche Carrera 911 was $229,400 in Australia before the price cut, but will drop to $206,500 from June 1. That might be cause for celebration for some, but the champagne loses its fizz when you discover the same car starts at $92,730 in the USA.

Australia’s Luxury Car Tax accounts for an extra 33 per cent of the Porsche’s price above $59,133 (the threshold set by the Federal Government). But that still doesn’t explain why the Australian price is more than double what it is in North America.

When asked why there was still such a large price anomaly, Porsche Australia spokesman Paul Ellis said: “You don’t price your car against what it costs in other countries, you price it against its local competitors. It’s market positioning.”

Prestige brands have strongly opposed Luxury car Tax since its inception in 2000, even though Toyota now pays more LCT than any other brand due to the large number of SUVs it sells over the threshold.

Porsche says the LCT is a “discriminatory tax”. “There isn’t a tax on other luxury goods. Cars are seen as a soft target,” said Ellis.


This reporter is on Twitter: @JoshuaDowling

Car / Australia / USA
Nissan Pulsar $19,990 / $16,100
Toyota Corolla $19,990 / $17,850
Mazda3 $20,330 / $18,370
Toyota Camry $30,490 / $24,460
Mazda 6 $33,460 / $22,968
Mazda CX5 $27,880 / $23,315
Mazda MX-5 $47,280 / $26,092
Toyota Prius $33,990 / $26,620
Mercedes C250 $67,900 / $35,350
BMW 320i $58,600 / $35,805
BMW 335i convertible $112,900 / $59,180
Range Rover HSE S/C $224,400 / $91,900
Porsche Carrera 911 $206,500 / $92,730

Source: Car manufacturer websites. All prices are in Australian dollars and do not include special offers or on-road costs. A 10 per cent sales tax has been added to all US prices (to match Australia’s GST, which is included in RRPs) even though the US national sales tax average is 7.5 per cent (from 3 per cent in Montana to 11.725 per cent in Arizona).

 

Comments on this story

Displaying 3 of 11 comments

  • Quickest fix if you read into Mercedes-Benz is to switch or to allow LHD cars to be imported by the brands to Australia and take advantage of the volume discount.

    James Posted on 05 March 2014 7:06pm
  • Was looking at buying an Audi R8 V10 spyder, here in Australia i could pay $450K. I looked in the U.K and i could get a better model of the same thing for $110K pounds... so $190K au. Just a BIT of a saving. Same as the Nissan GT-R... used 09 model will cost me 100K here. I can buy a brand new 2013 model in U.K for $110K. Same with a used 09 Mercedes C63 AMG, $90K here used, or $100K brand new 2013 model in U.K. The Black Series version is only $120K in the U.S. I'd hate to think what it would cost here... if it was even available, lol. I'm thinking of moving to England, just so i can buy an actual GOOD car. I could afford a Daihatsu Charade here in Australia, but i could probably afford a brand new FERRARI over there. I really want to buy an Aston Martin. So i'll save like 1,2,300K? What a joke it is here. Europe and America must laugh at us, their Lemons are our Luxury models. I couldn't believe my ears when i found out the new 2013 GT500 Shelby Ford Mustang in America, with like 600HP+... STARTS from only $49,990. LOL! I'd pay more than that for a 100HP Mazda MX5 here. I think a specialist importer sells them here... for $250K! Disgraceful.

    Jason Andrew of Aus(not for long) Posted on 12 August 2013 7:04pm
  • We could fix this in a flash by allowing Parallel Imports. Let any fool buy his own right hand drive car from the UK or Japan direct from the wholesale car dealers......problem fixed, prices dropRob over night

    Rob of WA Posted on 01 May 2013 3:48am
  • So long as Porsche is hitting its sales targets seeling at $206K why would they sell them here for $92K? All businesses sell their products for as much as the market will bare, why should car makes be any different? When the Salvos start making cars maybe we'll get a better deal.

    Henry of Sydney Posted on 30 April 2013 6:42pm
  • I think it still smacks of ALL of the manufacturers price gouging to some extent. Australia is not the only RHD market... UK, India, Indonesia and Japan to name several. So no real excuse there for the Japanese manufacturers in particular. Admittedly it will cost a little more to ship cars to the other side of the earth, but not that much more... if imported cars from China can have a RRP of $10000, then how much of that could the shipping be? Shipping certainly should not increase exponentially due to the price of vehicle being shipped. Both Mercedes and BMW manufacture 'volume' models in South Africa, which is roughly the same distance from Australia as Europe. Ultimately it is the government's fault on two levels, firstly taxation through the so called Luxury Car Tax and secondly by actively supporting a protectionist market (protecting I don't know what, these days?) that allows the local retail arms to practice anti-competitive pricing. Welcome to the Lucky Country!

    Mark of Adelaide Posted on 30 April 2013 5:11pm
  • They are optimising their profit and cashflow - you only want to sell you capacity. If it were more profitable to sell more but cheaper then they would do it, if it were more profitable to sell less more expensive they would do that too.

    James of Reality Posted on 30 April 2013 3:37pm
  • Who cares? Australia is not the US. Would you be happy to accept cheaper cars if it also meant halving the value of your home? Or if it cost you a 50% cut in your pay packet? For some reason sheeple seem to think we should be able to cherry-pick the good things about other economies to make some fiscal utopia but the world simply doesn't work that way. And let's not even talk about resale value, which is generally much higher here because car companies haven't dropped their pants just because the dollar is up right now.

    MotorMouth of Sydney Posted on 30 April 2013 8:44am
  • Thanks for the story Joshua. Some interesting points here that I for one hadn't considered - so that new Porsche Carrera 911 would be more like $170,000 if it wasn't for the LCT. That tax will always be with us, guaranteed with Julia's current problems. And RHD conversion costs weren't in my thinking either. Added to that things like the empty container vessels that leave here after vehicle drop-off and the retailers who must still be prepared to promote, sell and provide service for the vehicles in our little market and I appreciate the higher costs a little more. Still isn't a tantalising prospect that we have to miss out on cars that we could perhaps afford if we were in USA though. A decent 2 year old 911 for $70,000 would be affordable to lots of Aussies - (perhaps) $170,000, not so much

    stevecro of Australia Posted on 29 April 2013 11:18pm
  • This is an easy fix. Let us buy and drive Left hand drive vehicles on Australian roads.

    Wally of Darwin Posted on 29 April 2013 9:44pm
  • After just coming from the States, I can see why the small price difference is there on the cars on the list below 50k, except for the MX-5(We are just plain ripped on that). The Mazda 3 I rented had a plastic rear parcel shelf in the sedan. Also still had plastic dress rims on steel wheels, manual rear windows, and very cheap looking plastics. Our local models have much better quality interiors The Prius taxis I went in had woeful interior plastics, nothing like we get here. The Mazda 6, at the time was still the Gen 2 model, which was a completely different car to what we got. A lot more boat like. The only car I had better than what we get here was a Hyundai Accent. As for the cars North of 50k, that’s just the Marques taking a clear and plain gouge. And as a note to Mister Porsche of Australia, I can also consider it to be discriminatory that the wealthy can afford fancy accountants to legally reduce their tax bill. So I am happy for the government to get them back on something, somewhere, and it may as well be those cars you sell at an inflated price which also helps the government out. If you reduced your price to a realistic level, the LCT wouldn't be so great!

    Luke of Sydney Posted on 29 April 2013 9:32pm
  • “You don’t price your car against what it costs in other countries, you price it against its local competitors. It’s market positioning.” So basically you rip people off because everyone else is doing it. Nice.

    RickJames of Melbourne Posted on 29 April 2013 9:16pm
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