Author archive
Never Complain About Your Bus Driver Again
We Aussies seem quick to complain about anything, yet sometmes we need to open our eyes to what is happening overseas. OK, this isn’t a sermon, but how often do you moan about bus drivers, taxi driver,train drivers etc?
We reckon if you were waiting at some traffic lights and an Aussie bus driver acted like this Russian one, then you really would have cause to complain!!
This is an extreme case of making up time, but have you had any similar experiences with overseas bus or taxi drivers?
If so we’d love to hear from you, so leave your comments below.
Whilst Shopping in London…
Groan! She wants to go to Harrods- the iconic department store in Knightsbridge. Well, that’s not on your itinery, is it? Until now, that is.
“Yes, dear, I’d be happy to take you to Harrods. You go and shop and I’ll just wait for you outside”. Brownie points galore, but there’s a hidden agenda.
Just around the corner there’s the Berkely Hotel.
Yes, that’s where Ferrari have just opened up their stunning new London showroom (or ‘Atelier’ as they prefer to call it in Ferrari speak). Currently displayed are a Ferrari 458 Italia, a Ferrari California and a rather special racing Ferrari 512S from 1970.
Absorb yourself for an hour or so before flitting back to Harrods for some more brownie points.
Honda Cuts Prices
No, we’re not claiming credit for this! But call it a co-incidence that our price comparison survey preceded Honda’s announcement of a considerable price cut on some of the models in its range.
The popular Honda Jazz has been reduced by between $1400 and $2000, the CR-V has been cut by $2900 to $3400 and the Odyssey people mover has been reduced by a very substantial $2890 to $3570. That’s good news for the Australian car buyer. Let’s hope others follow suit!
The Big Price Rip Off Revealed
The Big Price Rip Off Revealed
The Aussie car buyer is being subjected to the biggest rip off in memory at car dealers’ showrooms if the following pricing chart reflects the truth!
It’s impossible to reach any other conclusion based on the figures we’ve gleaned from manufacturers’ web sites around the world.
Our survey of retail prices in Australia against cars of similar specification in the US and the UK show that, on average, we are paying at least 20 per cent too much for our new cars, and you can’t just blame the government’s high tax rates!
Whilst it is only a sample survey of selected makes and countries our price analysis depicts a very clear and compelling message to the Aussie motorist.
On the basis of the current value of the Australian dollar, most retail car prices could be drastically reduced and the manufacturer would still be making the same profits that he makes elsewhere in the world!
Why Do We Say This?
It’s pretty obvious if you study the chart below. We have selected a sample section of cars right across the price range and compared the selling price in Australia, the USA and the UK.
We have endeavoured to choose cars with similar specifications, but, of course, there will still be some differences so you should take the pricing as a guide only. Variations will occur depending on a number of factors including local taxes and delivery costs, but we don’t think that will make more than 5% difference on the prices quoted in most cases.
So let’s take a closer look at some of the statistics that we have gleaned from the chart. For the source of all these data, click here
• Adding all the prices together there is a 71% premium that the local buyer pays over his English counterpart. That premium leaps to 121% when compared to the USA.
• Even if we take out the expensive cars (which suffer a very high tax premium in Australia) we still see us suffering to the tune of 20% against the UK and 83% against the US.
• Economy cars have a closer price link, particularly those made in Asia. In some cases there is almost price parity, so good on you Toyota, Nissan and Mazda!
• More expensive cars get much more expensive! This is particularly true of Mercedes and BMW who seem able to charge so much more than their overseas colleagues, and, of course, you can see even clearer evidence of this with the exotic makes like Ferrari and Lamborghini.
Some Glaring Examples
We’ve applauded Toyota, Nissan and Mazda for close price alignment with their small cars, and we were impressed with Subaru’s pricing of their Forester and Outback models.
But now look at their sporty WRX STI. Here we see the poor Aussie car buyer is paying a 31% premium over the UK price and a massive 107% more than if he bought the same car on the USA. Why? Well, we asked Subaru Australia, and even they couldn’t give us an answer.
Now turn the spotlight on to Mercedes and its four wheel drive ML300. We pay a huge 47 per cent more than in the UK! You may think that it’s because the car is made in Europe- but it isn’t. It’s made in the USA, both versions are right hand drive with very similar specifications. OK, then, maybe it’s due the luxury car tax of 33%? Wrong again!
The luxury car tax for this car doesn’t cut in until the retail price (inc. GST) reaches $73, 375.00 and contributes only (?) $7341.69 towards the final RRP. Deduct this from our calculations and we still see a punishing premium of 35% against the UK and 97% against the USA recommended retail price.
So why is this so??
We asked a number of local players to offer reasons why there is such a disparity, and they all quoted pretty much the same answers:-
• “It’s the government’s fault with the taxes they impose”
Our Comment:-
Yes, but that is only partly true. There is a 10 percent import duty and 10% GST in Australia, but the GST in the UK (VAT) is 20% which is virtually the same.
• “The State governments get taxes too”
Our Comment:-
Again that is partly true as there is stamp duty on the purchase of a new car, but there are similar taxes (though not always as much) elsewhere.
• ‘Australian prices include third party insurance’
Yes, we agree. In the UK third party insurance is extra, which for basic cover could add $500 to the prices quoted in our comparison chart. The same applies for US vehicles. But if you add $500 to each price you still see a massive premium for Australian buyers.
• “The figures are exaggerated by the luxury tax component”
Our Comment:-
Yes that’s also true, but if you take the luxury tax off the figures for luxury cars there’s still a premium of 35% over the UK (and the Ferrari is still at least 45% more!)
• “Economies of scale work against us”
Our Comment:-
Now there we agree completely! A car dealer in the US deals with many more customers than here. That saves him money. The importer or manufacturer enjoys economies of scale too, but not to the degree reflected in the pricing, otherwise you would not see parity on any of the cars in the table.
• ‘Transport costs are higher’
Our Comment;-
Again there is some truth in this, but it only makes a difference of less than one percent in the final price – hardly a worthwhile justification. In some instances it also works against the Australian price premium as it costs more to send cars from Asia to Europe.
• “Australian Design Rules cost a lot to comply”
Our Comment:-
Many imports require little effort to comply, and therefore impose little extra costs. Some do require a lot and are therefore not usually imported.
• “It’s a short term aberration due to the strength of the Australian dollar”.
Our Comment:-
Yes, there’s some truth in this, too. We need stable prices, and do not want them to fluctuate daily with the currency market, and, indeed, when the dollar sank in the late nineties importers tried hard, and to their credit, to delay price increases. But the dollar has risen above these low rates and has been sustained as a strong currency for a long time now, so we are well overdue for some benefits from it.
None of these reasons amount to much in our view, certainly not enough to justify anything like a 71% premium.
Having heard all the excuses our take on the price differential is:-
1. Manufacturers and importers will charge the highest price they can expect to get.
2. They have not, in the main, reacted quickly enough to the strong Australian dollar.
3. ‘Perceived luxury’ means bigger margins.
4. The Australian car buyer seems happy to wear it.
So what can we do about it?
The internet is already doing favours to the Australian consumer. We are seeing more and more parity pricing, and the willingness of consumers to purchase from overseas. Whilst that is more difficult, if not impossible, to do with new vehicle purchases, it certainly helps in making people aware, and that increases pressure on manufacturers and importers to be more in line with overseas markets. Nobody likes the tag of ‘profiteering’.
We think this is a true rip off of the Australian motorist, so we want to make waves! We’ve created a Facebook Group, we are contacting the media and we’re enlisting your support. So let’s hear from you below, and join us on Facebook and help us bring the car makers into line!
Remember the more ‘digital signatures’ we can gather below and on our Facebook page, the greater difference we can make!
Level 2, 9 Help Street