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New-car affordability hits 38-year high as prices hit 20-year lows.
It may sound like a slick dealer slogan, but there really has never been a better time to buy a new car.
The prices of new and used vehicles have hit record lows and experts predict they could fall even further later this year.
The Toyota Corolla has the same $19,990 starting price today as it did 20 years ago, despite the new model being significantly safer, more economical and better equipped.
If the price had kept up with inflation (66 per cent over the past 20 years, according to the Reserve Bank of Australia), today’s Toyota Corolla would cost from $33,300.
Meanwhile new-car affordability has hit a 38-year high due to wages growth and record-low interest rates.
“We’re one of the lucky countries across the advanced world that have enjoyed real wage gains over the past decade,” said CommSec economist Savanth Sebastian.
“We’re earning more money than ever before, interest rates are at record lows, and new cars are cheaper because of the sustained strength of the Australian dollar.”
Commsec figures estimate it now takes someone earning the national average wage 25.9 weeks to buy a large family car compared to 31.3 weeks three years ago and 37 weeks a decade ago.
And yet new-car prices could fall even further towards the end of the year if the exchange rate improves.
“We expect the Australian dollar to lift over the next six to nine months,” said Mr Sebastian. “So we’re likely to see even bigger discounts.”
Cheaper production costs and intense competition have also driven down prices.
There are 67 brands selling cars in Australia competing for 1.1 million sales annually, compared with 51 brands in the UK competing for 2.2 million sales, and 53 brands in the US competing for 15.6 million sales.
The downside to cheaper prices is that anyone wanting to trade-in their used car for a new one may be in for shock, as the value of secondhand vehicles has also hit record lows.
“There is definitely a knock-on effect,” said Nick Adamidis from Glass’s Information Services, which monitors used car values.
“New-car affordability is extraordinary and car companies are adding more and more equipment even as prices get lower,” said Mr Adamidis.
“But it means the value of used cars takes a hit because they are suddenly less appealing -- they don’t have as many gadgets -- and more people buying new cars means not as many are buying used.”
Used car prices are the lowest they’ve been in 10 years and prices are expected to continue to fall, said Mr Adamidis.
“We’ve had record new-car sales over the past decade, and they’re now starting to flood the used market,” said Mr Adamidis. “There is definitely an oversupply of used cars; it’s good if you’re buying but bad if you’re selling.”
Figures compiled by News Corp Australia show the price of popular mainstream cars are significantly cheaper in Australia than in the UK, although we still pay more than buyers in the US.
UK: $32,029 (£17,650)
USA: $22,804 ($US21,225)
UK: $33,562 (£18,495)
USA: $24,925 ($US23,199)
UK: $34,470 (£18,995)
USA: $21,539 ($US20,048)
UK: $39,188 (£21,595)
USA: $28,084 ($US26,149)
UK: $45,657 (£25,160)
USA: $25,997 ($US24,206)
UK: $40,821 (£22,495)
USA: $28,631 (US$26,659)
UK: $41,729 (£22,995)
USA: $34,817 ($US32,406)
Toyota 86 coupe
UK: $45,567 (£25,110)
USA: $30,101 ($US 28,017)
Ford Focus ST hatch
UK: $40,458 (£22,295)
USA: $27,418 ($US25,520)
UK: $55,003 (£30,310)
USA: $48,100 ($US44,770)
UK: $59,286 (£32,670)
USA: $59,388 ($US55,297)
Range Rover Evoque
UK: $52,998 (£29,205)
USA: $50,682 ($US47,190)
Source: Manufacturers. All prices are inclusive of tax but not on-road costs. All cars have automatic transmission (except the performance models). Every effort has been made to compare like with like but in some cases engines and equipment vary slightly. Exchange rates as at 1 August 2014: 1 USD = 1.0744 AUD, 1 GBP = 1.8147 AUD.