The Extra Price Charged For Cars In Australia

[LoudPipes]

Car prices could tumble as government considers industry upheaval

DateSeptember 4, 2014
David McCowen
Motoring Writer

Luxury cars such as the Mercedes-Benz C-CLass could become much cheaper under proposed changes to the car industry.

New and used cars could become significantly cheaper under a range of proposals put forward by a government white paper regarding Australian Standards.

A study prepared by the Department of Infrastructure says the price of a new Mercedes-Benz could drop by up to $25,000 if buyers were allowed to source cars directly from manufacturers, and import near-new models from countries that meet Australian regulations.

The report also recommends that Australian Design Rules are relaxed, as making vehicles comply with local rules costs an average of $229 per vehicle, while vehicles imported under the registered automotive workshop scheme cost an average of $1988 to convert to Australian regulations.



It also canvasses the possibility of bypassing car dealers by allowing customers to purchase cars online and have them delivered to their doorstep. It's a model that Subaru and Mercedes-Benz have toyed with in Australia, and one that Tesla has employed successfully in North America.

The paper says the Abbott Government would need to consider the proposal's potential effect on safety, emissions and consumer protection.

Assistant Minister for Infrastructure, Jamie Briggs, says the discussion paper is only the first step to reviewing legislation that may have passed its use-by date.

"No decision has been taken by the Australian Government to reduce these restrictions and we have no intention to allow Australia to become the dumping ground for other countries' second-hand lemons,"

"Any potential changes to the Act will be comprehensively examined in close consultation with stakeholders, and I strongly encourage interested parties to put forward their views."

The Government is open to consultation until October 13. It has taken on board some recent recommendations put forward by the productivity commission.

Andrew McKellar, chief executive of the Australian Automobile Association says motorists could benefit from eight proposed options.

"We're certainly open to looking at the options that are outlined there," he says.

"From a point of view of motorists I think there are two paramount issues, safety and affordability. Provided we are assured that the safety standard can be maintained we have no problem with evaluating options that could lead to increased affordability.

"We won't have vehicle manufacturing in Australia after the next couple of years. If there are options that lead to better competition and vehicle affordability for motorists, I think that's something we should consider."

Experts preparing a defence of the industry have warned that the proposals are flawed, and could sound the death of the Australian car industry as a whole.

The 2014 Review of the Motor Vehicle Standards Act says prices of new and used cars could tumble and that, "if restrictions were removed, the price of a Mercedes-Benz C-Class would fall by between $20,000 and $25,000, less the price of shipping".

The entry-level Mercedes-Benz C200 sedan is priced from $60,900 locally. The same model in England, with less standard equipment than Australian models, costs £28,335, or about $49,900 at today's exchange rate.

Mercedes-Benz spokesman David McCarthy rubbished suggestions that Australian cars were overpriced.

"You're not looking at huge margins in this industry," he says.

"People talk about us making huge, obscene ridiculous profits, but it is nonsense.

"Let's make an assumption that you do a spec-for-spec comparison with other right-hand-drive markets - on a [Mercedes-Benz] C200 there is about $3000 in it, but the A180 and A45 models are significantly cheaper here.

"Let's deal with the facts, and the facts are that for a C-Class in right hand drive with comparable equipment, there is little difference."

But McCarthy acknowledged that there may be an opportunity for buyers to save money at the top end of town.

"Over $150,000, yes, there could be an opportunity for cheaper vehicles for the consumer but we are talking about 1 per cent of the market if that."

Glass's Guide valuation expert Santo Amoddio agrees.

"If you're looking at a regular car like a Toyota Corolla or a Mazda3 you would be wasting your time by importing it," he says.

"But if you are looking at a Porsche or a new 7-Series BMW there is a potential for significant savings."

If design rules are streamlined and parallel imports are allowed, Amoddio says that "potentially, there's going to be a 20 to 25 per cent drop in values for new cars".

Such a move would have an immediate effect on the value of cars already on Australian soil.

"We think that if they allow this to occur then any existing new vehicle or new vehicle that exceeds the luxury car tax value will have a one-off hit on its used car value," Amoddio says.

"If you're an owner of an existing near-new car you're certainly going to take a significant hit in value."

Used vehicle values would also be affected by the price of available cars overseas.

A second-hand 2010-model Mercedes-Benz C250 CDI currently costs approximately $50,000 in Australia and £14,000 in the UK – less than $25,000 in Australian dollars. With import barriers removed, buyers stand to save a significant amount of money by importing cars from overseas. Such models would need new components such as speedometers that read in kilometres per hour before joining Australian roads.

But replacement speedometers could leave buyers open to fraud as substitute units may not have an odometer that accurately records the number of kilometres a car has travelled.

Under today's regulations it could cost approximately $10,000 in shipping and import duties to bring in a $30,000 car.

McCarthy questions the provenance of used prestige cars sourced from overseas.

"It is not a simple issue," he says.

"How do you know it's not stolen. How do you know it's not two vehicles that have been welded together. We don't import crashed cars that have been repaired, or cars that have been subject to flood damage."

With Australia set to stop building cars in 2017, Amoddio says proposed changes have the potential to eradicate the local vehicle retailing and wholesaling industry.

"It's going to take people away from buying vehicles in Australia," he says.

"There's already been a dip in new car sales in the market, the industry is under a lot of pressure as it is. "This will just put more pressure and stress on the industry."

Michael Tynan is the managing director of Sydney's Tynan Motor Group which holds dealer franchises for 14 manufacturers including Mercedes-Benz, Honda and Chrysler.

He is sceptical of the proposed changes.

"I think it's a real backward step for Australia and the Australian consumer," he says.

"It's just not right.

"Australian car pricing is at the lowest it's been since I've been in business, and I've been in the car industry going on five decades."

Tynan says car dealers would quickly adapt to new regulations if the government opens relaxed import restrictions.

"We're in the process of investigating it thoroughly ourselves, if it's going to happen we have to be part of it," he says.

"We will change with the times, we have to."

Eight steps: What the White paper says the government should consider:

1 - Do nothing and maintain current vehicle prices and standards.

2 - Repeal current legislation altogether, leaving consumers vulnerable to vehicles that do not meet standards, and exposing the environment to increased pollution.

3 - Modernise 25-year-old legislation with a goal of making the industry more transparent, effective and efficient.

4 – Introduce stronger legislation that tightens vehicle regulations, giving the government more power to enforce recalls and create its own regulatory body separate to thecurrent Federal Chamber of Automotive Industries.

5 – Harmonise Australian Design Rules with international standards, making vehicles cheaper.

6 – Streamline the vehicle certification process, allowing large numbers of privately imported vehicles to enter Australia as long as they meet the same standards as models officially imported by car companies and dealer networks.

7 - Reduce barriers to personal imports, which would include the removal of a $12,000 tariff on vehicles without import approval, reducing the cost of second-hand cars and possibly driving down prices for new vehicles as a result.

8 – Consolidate concessional arrangements to make it easier for people and businesses to import cars.

http://www.drive.com.au/motor-news/car-prices-could-tumble-as-government-considers-industry-upheaval-20140904-10cavp.html

[Ben73]

Originally Posted by Falcon Coupe

Try floating into the oncoming lane a little to see if it's safe for overtaking!...A bunch of every day commuter LHD's would cause carnage.

I assume the governing body figure's it's ok for a Sunday cruiser hence the ability to register them.

Can't remember the last time I had to check for oncoming traffic while overtaking around town.
Don't they tell us to only do things on the road if its safe to do so. That means if you agree to buy a left hand drive you should just accept the fact you wont be able to overtake on the wrong side of the road very often.
Concidering I very rarely drive my personal car on country roads, I'd give up wrong side of road overtaking to have a better car for cheaper.

I have wondered how kuchnitnwould cost to import a car from UK to here. They are already RHD so surly there is not much you have to do to make it legal to drive here. Probably cheaper than buying the same car from a local dealer.

[2011G6E]

I'll be interested to see what happens to new car prices once they stop making Falcon and Commodore here...

I mean logically since there is no "locally made cars" to "protect" then all tariffs and import taxes should be dropped completely, and car prices should fall.

Should. But won't.


Funny that so many people are terrified of LHD new cars. I would lay money that these same people would happily drive a classic LHD car around happily. Australia is just about the only country in the world that doesn't trust it's drivers with LHD new cars...of course if they could just spit them out of the factories overseas, in the USA for instance, and we could drive new LHD cars at near "foreign" prices without expensive mods to them for our tiny market, imagine what would happen to other "normal" car sales.

My nephew in Scotland went on a trip to Europe and they came home with a LHD Renault hatchback, and about three thousand pounds cheaper than they could get it in England. No problems driving it, plenty of people do the same.

Makers having to produce special models for our tiny market because of unique design rules and a fear of LHD doesn't help consumers at all.

[NX74205]

Originally Posted by LoudPipes

http://www.drive.com.au/motor-news/car-prices-could-tumble-as-government-considers-industry-upheaval-20140904-10cavp.html

I'd love to see proposals 5, 6, 7 and 8 implemented.

Oh, and scrap the luxury car tax.

I'd love to be able to get a brand new Mercedes-Benz C-class for $40,000.

Originally Posted by 2011G6E

Funny that so many people are terrified of LHD new cars. I would lay money that these same people would happily drive a classic LHD car around happily. Australia is just about the only country in the world that doesn't trust it's drivers with LHD new cars...of course if they could just spit them out of the factories overseas, in the USA for instance, and we could drive new LHD cars at near "foreign" prices without expensive mods to them for our tiny market, imagine what would happen to other "normal" car sales.

My nephew in Scotland went on a trip to Europe and they came home with a LHD Renault hatchback, and about three thousand pounds cheaper than they could get it in England. No problems driving it, plenty of people do the same.

Makers having to produce special models for our tiny market because of unique design rules and a fear of LHD doesn't help consumers at all.

I've driven LHD cars, just not in Australia. Frankly, I don't see how it's going to work, driving a LHD car around on RHD roads. You have a massive blind spot when you're pulling out to the wrong side of the road to overtake, or to turn right across traffic.

[2011G6E]

Originally Posted by NX74205

I've driven LHD cars, just not in Australia. Frankly, I don't see how it's going to work, driving a LHD car around on RHD roads. You have a massive blind spot when you're pulling out to the wrong side of the road to overtake, or to turn right across traffic.

Other countries don't seem to have a problem...

[irish2]

Originally Posted by NX74205

I'd love to see proposals 5, 6, 7 and 8 implemented.

Oh, and scrap the luxury car tax.

I'd love to be able to get a brand new Mercedes-Benz C-class for $40,000.



I've driven LHD cars, just not in Australia. Frankly, I don't see how it's going to work, driving a LHD car around on RHD roads. You have a massive blind spot when you're pulling out to the wrong side of the road to overtake, or to turn right across traffic.

How many people actually overtake on single lane roads these days anyway? On trips on single lane Highways recently, I was the only car willing to go around a slow vehicle, as everyone else was too worried to break 99km/h. Also many highways have overtaking lanes every few K's now anyway.

[GasoLane]

Originally Posted by irish2

How many people actually overtake on single lane roads these days anyway? On trips on single lane Highways recently, I was the only car willing to go around a slow vehicle, as everyone else was too worried to break 99km/h. Also many highways have overtaking lanes every few K's now anyway.

Not sure about where you live and drive. But around here, and most of country NSW, nearly all roads are single lane with no overtaking lanes.

[aussie muscle]

Originally Posted by F6 Concorde

The cost of manufacturing in Australia is too expensive. We can't compete on an international level. That said, why are we being ripped off on imported products?

how come Germany and England cam have big manufacturing sectors? they have a higher currency than we do.

We also pay higher prices for software purchased online (so no delivery charges), eg Steam has a higher price in Australia! there's absolutely no reason for that premium.