Why You Can't Beat The Price Rip Off
Over the past couple of months, we’ve undertaken the biggest car prices comparison survey ever published.
The clear and incontrovertible conclusion is that we pay far more for our new cars than can be justified.
Of course, we are not alone in this, as many products are more expensive in Australia, and we’ve heard numerous stories about how people have circumvented this by buying direct from overseas using the internet.
So why can’t you do this with a new car? Well, the Motor Vehicle Standards Act (1989) effectively prevents you! These import rules were initially designed for a genuine road safety agenda, but that is now largely irrelevant and is, in effect, acting as a measure of protection for the local importing and manufacturing industry.
Any new car that does not comply with all the provisions of the Act cannot be imported for use on Australian roads, and that means any new car personally imported.
But there are exemptions.
The Personal Import Scheme is a specific exemption from the provisions of the Motor Vehicle Standards Act (1989), but it still has its own administrative rules. The guidelines governing these rules for Personal Imports are essentially that you have owned and demonstratively used a car overseas for a minimum of 12 months before seeking Personal Import Approval. There are close checks made on these claims too, both in terms of ownership and use throughout the twelve month period.
The other major exemption is for cars built prior to January 1st, 1989. These can be imported unrestricted under other ‘special exemption’ provisions – but that date is fixed – it doesn’t move forward from year to year, and there is little likelihood that any changes will be made. You will still have to pay various taxes, including GST when you import the vehicle.
So what about grey imports?
A grey import is a vehicle that is legally imported outside the manufacturer’s legitimate import process. It stems from government decisions taken some twenty years ago that permitted Australians to buy vehicles from overseas that were never sold over here. But once they arrive in Australia they are subjected to a compliance process to conform to Australian Design Rules, and this can sometimes be complicated, tedious and expensive. Such hurdles mean that whilst these cars can represent excellent value, they are mainly restricted to an enthusiast market of limited numbers.
So the bottom line is: if you want to buy a new car and save money by buying it overseas, you have to stay there at least 12 months before you have a chance of bringing it here with you! (Mind you, when you look at the massive price differences in our survey, you may well consider it worthwhile!)
Postscript:- Since our last article on price comparisons was published, the US Dollar and UK Pound Sterling exchange rates have fluctuated significantly. Clearly, this affects any conclusion on price comparisons particularly as importers defended price differentials by ‘hiding behind exchange rates. So we looked at our price comparison tables and re-jigged a couple of examples using the very worst rates that we had working against us to see if prices reverted to a close comparison. Guess what? They didn’t. As you can see below there is a small difference, but in no way does it diminish our claims that we still suffer a huge price disadvantage that should be acknowledged by the motor manufacturers and importers NOW! Furthermore exchange rates have now reverted back to closely resemble the prices quoted in our survey.
Car Price Comparison at Least Favourable Exchange Rates
Vehicle Aust Price US Price UK Price
Mercedes Mb 300 $93,859.00 $48,840.00 $68,801.00
Subaru WRX STI $66,928.00 $35,815.00 $54,225.00
Level 2, 9 Help Street
rainer zoller says:
Could a registered motor company in Australia I’m port… At these prices .. or gav import tax kill it.
November 18th, 2011 at 12:53 pm
John Aquilina says:
I’d love to be able to purchase a great imported car for its true value as reflected by your price comparisons. In my Limo business there is a great demand for BIG Luxury American SUVs for Airport transfer and media work. A Lincoln Navigator or GM Escalade start at around $35k in the US. Landed in Australia they are about $120k. Not to mention going straight to manufacturers of Chinese Cars at http://www.Alibaba.com (http://www.alibaba.com/catalogs/–100002872————6-5574) where you will find plenty of new cars available to you (if regulations allowed) from $2000 onwards. You would seriously buy a cheap hack car and throw it away when it stopped going.
But then If Australian regulations allowed and I went out and bought an import then I guess everyone else would. It would drive local manufacturers to the wall, increase car ownership, increase road accident injury & deaths, decrease public transport use clog up our roads even further.
Perhaps our high prices do preserve some things that we like here in Australia…fresh air, no traffic and safe quality cars.
Talk to ANYONE returning from ANY main city within China and they rarely see Blue Sky – yet they and their manufactring power has the world by its tail, dictating to a greater extent what we as consumers get. But they are happy to live in concrete canyons and constant pollution to have this manufacturing dominance.
Go figure!
November 18th, 2011 at 2:25 pm
Craig Davies says:
Can you give me prices on RHD BMW’S imported from the US or the cheapest source either new or late model
November 18th, 2011 at 4:05 pm
Peter Katsanos says:
This small price comparison only goes to confirm that we (in Australia) are being RIPPED-OFF bybthe manufacturers/dealers/sellers of the various motor vehicle companies. Furthermore it has nothing to do with our taxes or that we are a small market. It goes back to the idea that that we are a wealthy group of consumers and that we can afford to pay a higher price.
This no doubt serves the rich because they can put on the airs and graces by showing off their new and expensive cars which the average cannot afford at the current rip-off prices.
Perhaps it was time that governments got into the act by restricting price gauging in Australia.
November 18th, 2011 at 4:11 pm
peter dutnall says:
Am from the UK and have realised this for a long time and is reason I drive around in my old car would dearly love to be buying a prestige car but hate being ripped off if there are many like me the whole Aussie economy will be missing out on a faster turn around of car purchases
November 18th, 2011 at 7:01 pm
Trevor says:
What portion of the $93,859 Mercedes goes to the Australian state and federal governments in duties and imposts? At 33% Luxury Tax, 5% Stamp Duty (Vic) and 10% GST my bet is plenty! So maybe it doesn’t all end up in the pockets of the dealers.
November 18th, 2011 at 9:53 pm
Ken says:
Unlike years gone by when information was hard to find on how to import and all the costs, Oz Customs now provides a wealth of information – see http://www.customs.gov.au/site/page4371.asp
It will help you dismiss some of the myths
November 19th, 2011 at 10:13 am
Jim says:
Great article, Yes we are ripped off, but not just on cars, also look at car spares, they are also far cheaper in USA and UK. But it does not stop there, we are ripped off on a lot of other items as well.
November 19th, 2011 at 11:47 am
Graeme says:
One of the major reasons is to protect the Australian car manufacturing industry.
There are only 13 countries worldwide that produce motor vehicles. It does not make sense that Australia be one of them.
We are too small a market, there are no economies of scale and the burden on the Australian economy of highly subsidising a “boutique” car industry are unsustainable.
It should be all about comparitive advantage – the car industry is the one industry that is swimming against the tide. We are all paying a very high price for the membership of the “13 Club”.
November 21st, 2011 at 11:55 am
Andrew says:
Sure, a portion does end up in the Gov’t purse due to luxury car tax etc; the missing element in the equation of analysing the overpricing of imported cars is knowing if the huge margin is added before it lands or after the car lands in Oz ? You can bet that the car importers add the margin in a way that minimises the tax & maximises their profit.
In any case if they charged a lower retail price for the cars (similar or closer to US, EU or UK prices) there would be: fewer of their imported cars that fall into the Luxury Car Tax threshold
November 21st, 2011 at 2:08 pm
Alexander says:
Mercedes UK have just announced an 11% cut in prices for the new series B Class and M Class….will we see this discount in Australia??
November 21st, 2011 at 6:17 pm
Jeff says:
I imported a 1997 Toyota Surf 3L TD intercooled in the last month of being permitted to imported the Surf’s back almost 10 years now.
WHY can’t we import the Toyota Surfs when you can import all these Nissan Skylines ?
Is Mr Toyota in Australia too powerful & can determine import policies ?
November 26th, 2011 at 10:02 am