New car prices

[nutty]

Hi,

I was watching top gear usa last week, and in the 2nd ep they had Tanner Faust in a Mitsubishi Evo X. Im a huge fan of the Evo and was looking to get into one a few months back, but decided it was too pricy.

Anyway, got the end of the ep, and he mentioned you can buy them for $44,000 USD.. so about the same in AUD..
Seeing last time I went into Mitsubishi they wanted ~80k for it, I checked it out today and it looks to be ~71k.

Anyone want to explain why the car would be almost $30,000 more in Australia? is it just us protecting holden and ford?

[wobblysauce]

Because.

[Vilante]

You know you don't have to post if you don't have anything to say Wobbly?

[nutty]

Im not sure he does

[wobblysauce]

Well.. why does everything else have a Big mark up.. a simple just Because.

About £30,000 in the UK around $47,000USD also. If you want a some what cheaper option it is import but then you have to do a bit more work to sort out the paper work.

But yes, there are a few car makers that get a big fat cheques(from the Government) to build and sell in Australia.

[nutty]

But Mitsubishi job isnt to make sure that holdens are fords sell well... I mean surely if they get an evo to come in at mid 40k's they will sell very well.. seeing they are will be the same ballpark as a SS/XR8, rather then fighting with a HSV/FPV

[Exar Kun]

A few reasons...

- Economies of scale - The USA is a huge market and lots of cars are sold there so manufacturers can afford to sell with a lower margin. I read somewhere from a Porsche rep in Japan that Americans pay less drive away than what dealers in Japan pay wholesale.
- Bugger all taxes, tariffs etc compared with this and lots of other countries.
- Manufacturers charge less there because they are expected to. After many, many years of cheap metal, Americans would balk at the prices we pay.
- Manufacturers charge more here because they can. The prestige Euros make a crap load of profit in this country but that's just what we are used to paying. Lowering prices all round would hurt their image, even if they increased sales a bit.
- A fairly trivial thing but the lowest spec of cars sold here is usually quite a bit higher than over there so looking at the base price of cars sold in each country isn't always comparable.
- Look at the minimum wage and working conditions in the States compared to here... Unfortunately we can't both have great minimum employment conditions and cheap stuff. It doesn't happen that way.

It really does suck though when you see what prices are. Have a look at the UK though - then it gets more confusing. An HSV GTS equivalent in the UK will set you back around the same price as what one costs here... but then you could pick up a brand new BMW M3 for the same price! Depreciation of cars is woeful in the UK too whereas in the USA it's only about as bad as it is here. Basically we get screwed on car prices either way although not as bad as some European countries... ask Markus or anyone living in Belgium...

[wobblysauce]

For the limited amount of cars that would be sent over here.. you could say maybe a bigger mark-up or more middle men each getting a slice.


We also buy a car to have for Quite a few years being our Culture, US use there cars for 2 years then get a new one or they pay higher insurance costs if i remember correctly.

[r8response]

Import tax, possible luxury tax, GST.

[Hz-Lab]

Well, Exar & r8, whilst I appreciate you guys "having a go" at this question. You are both clearly wrong.

The real reason is....

"Because"

DEERRRRRRRR!

[r8response]

Durp

"Because"

[durbster]

I heard John Bowe got involved in the car sales legislation and basically screwed you guys over. And he laughed while he did it.

The real answer is that it serves you right for living so far away from everybody else.

[Sambo]

Guys, try not to be the cause of something here..

[r8response]

The real answer is that it serves you right for living so far away from everybody else.

Could be worse, you could live in Great Britain

[Hz-Lab]

well he lives there..."because"

[nutty]

Some great points Exar, something I also found interesting.
Base model Lancer AUS
$21,490 which means your paying 330% more for a evo
Base model Lancer USA
$16,811 which means your paying 261% more for a evo

[Doso]

Some great points Exar, something I also found interesting.
Base model Lancer AUS
$21,490 which means your paying 330% more for a evo
Base model Lancer USA
$16,811 which means your paying 261% more for a evo

that would probably be partially due to luxury car tax on the car. 33% for every dollar above 57K is ALOT of money

[VTRacing]

Having to go through ADR compliance doesn't help, either.

[markus]

Hi,
I was watching top gear usa last week, and in the 2nd ep they had Tanner Faust in a Mitsubishi Evo X. Im a huge fan of the Evo and was looking to get into one a few months back, but decided it was too pricy.
Anyway, got the end of the ep, and he mentioned you can buy them for $44,000 USD.. so about the same in AUD..
Seeing last time I went into Mitsubishi they wanted ~80k for it, I checked it out today and it looks to be ~71k.
Anyone want to explain why the car would be almost $30,000 more in Australia? is it just us protecting holden and ford?

70000€ here - about 94000 AUD.

Anyone want to explain....

[matticooper]

That's today, but what was the exchange rate when the cars were delivered. If it was over 3 months ago, I believe the rates weren't as favourable.

[Exar Kun]

Here is a massive quote for you about luxury car prices in Australia from the local Audi MD. It's a nice explanation but they don't manage to explain how some cars can be half the price (or less) in the USA.

http://www.carpoint.com.au/news/2011/pr ... rest-23595" onclick="window.open(this.href);return false;

Australia is a 'hot-climate' market, says Audi's local MD Uwe Hagen -- and that has some bearing on the cars the importer sells here.

Hagen (pictured), speaking with the Carsales Network during the launch of the A8 TDI models earlier this week, dropped the gem of information that Australian-delivered Audis are built to a higher standard for our hotter climate. This not only delays the introduction of altogether new models by three or four months, it also pushes up the landed cost of the cars once they arrive.

While the cost of upgraded glues and plastics account for some of the price difference, tax also makes a difference, said Hagen. If the price of a car exceeds the Luxury Car Tax threshold, every dollar extra incurs 33 per cent tax. Nor does that include the additional 10 per cent GST payable across the full price of the vehicle... or the five per cent import duty.

But even that leaves a considerable difference in pricing unexplained. Why is it that cars in other markets are priced so much lower than in Australia, once the international price is converted to Aussie dollars? It's a particular sore point with consumers when the Australian dollar is currently above parity with the Greenback and is well ahead of where it was against the Euro, prior to the GFC.

"First of all, I can turn the question in the other direction," replied Hagen. "Of course you have a home market and you do the calculations always [based] on your home market. Then, no one knows -- looking into the future -- how the currency rate is going to develop. So what you do, in general, you try to secure currency exchange rates. So you [the consumer] pay extra in any case, to secure the rate. It's normal, it's not only with cars, it's with every business.

"Throughout the last month, the Australian dollar has developed quite positively. What you can't achieve in a company like this... let's say now we do a price reduction -- and then the exchange rate changes, we do a price increase. No one will accept this in this market, because we're not a stock exchange.

"But when you have a discussion on new launches, then you have discussions on [pricing]. We also raise our hand and ask for prices in the market that will make the car more competitive."

So, as is the case for other importers, Audi Australia haggles for the best possible price from the factory on the eve of the car's launch in Australia. The local Audi team go to great pains in settling on the price for a new car. Not only must it be competitive with rivals in the marketplace, it must be consonant with prices charged for the car's predecessors in the market. Hagen explained that the company has to work out the price based on a roughly seven-year life cycle for any new model.

"[In] a life cycle of seven years, your whole calculation is based on seven years -- volume [for example].

According to Hagen, constantly readjusting the prices of new cars will inevitably impact on the retained values of those cars and earlier models when they come up for sale -- not only when on-sold from the new buyer to the second owner, but also from the second to third or fourth owners.

And cars aren't like petrol, Hagen continues. An importer of cars can't buy a stock of cars and hold them in reserve for ever, to sell at a time when the acceptable retail pricing and landed costs are in alignment. By contrast, the oil industry and its local wholesalers do buy fuel in bulk lots to hold in reserve and sell at the appropriate time.

For the car companies, as history has shown, cars held in bond stores for up to 18 months or more don't cope very well. Cars are not designed to sit still for a year or two at a time. But that's not an issue of any consequence for Audi anyway, Hagen explained. What is a matter of concern is the interest payable on each car shipped here. Audi and other prestige importers borrow to pay for the cars and the interest begins mounting up from the moment each car leaves the factory. And even the cost of transporting 20 luxury cars to Australia adds a significant per-unit premium to the landed cost, over the transport costs for 1000 cars across the Atlantic.

If a period of 10 weeks passes between a $100,000 car being built and being sold in Australia, that's $800 interest per calendar month based on 10 per cent interest -- or about $2000 for the 10 weeks. Then the dealers have to pay interest as well (on their 'floorplan'). All the worst-case interest scenarios have to be built into the final price.

"Our stock, on average, is maybe 60 days [old]," said Hagen. "The longest period is just the transport period. When the car is going from the factory to the ship, we have to pay the factory for the car. We also secure [the price from that time]. Same as with the dealer... the transfer [of ownership takes place] when the car is in the country."

Interest rates in Australia are significantly higher than in other markets, currently. The current prime rate in the USA, according to Wikipedia, is 3.25 per cent - versus the 4.75 per cent official interest rate set by the Reserve Bank of Australia.

"If the interest rate is changing... going up, I can't charge a different price to the customer," Hagen added. "If I have the car, let's say three months for transport and two months staying in our stock -- that's five months and in these five months maybe the interest rate is going from three per cent to six per cent.

"It's our risk... As long as the car is on our bill... this whole system has to cover this risk because you have to have stock -- and we don't [pass the cost] on to the customer.

"What you have to see is that the cars are not [always] comparable. There are some things -- like... the hot [climate car] calculation -- it makes a car more expensive. Then there are specific packages in the car, so the spec is different -- what we call 'country setting'. Then, the interest situation is different...

"So the whole calculation platform is different, and this is causing different pricing."