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FCAI Response to Afr Article on Car Prices

The Australian Financial Review’s simplistic analysis of car prices across countries, as published on 17 April 2015 (Cheaper cars under import plan, p3), is misleading as it does not compare like vehicles; rather, it disregards specification levels and features and compares high-specification model variants with low-specification variants, and even cites research that compares a Volkswagen Golf model and specification level sold in Australia with a variant in Tokyo, which is not even available in the Australian market.

This kind of poor research distorts the public policy debate and misleads consumers about the price of new cars in Australia.

In the article, it is said that a typical BMW 3 series 328i costs $64,000 compared to $55,000 in the UK , while a Mercedes-Benz ML350 BlueTec Diesel costs $101,000 here and $85,000 in Japan.

This is simply not true. The only way to properly asses the price difference between vehicles is by comparing like for like specifications. When you compare BMW 3 series 328i sold in the UK with like specifications to that sold in Australia, you can see that the price difference is less than $600. This real comparison is backed up by robust independently verified specification data, and it is provided on the FCAI website.

Information on the price and specification differences of the Mercedes-Benz ML350 BlueTec Diesel is also available on the FCAI website. The model is some $8,000 cheaper in Australia than in the UK, and in fact, you simply can’t compare the vehicle with a Mercedes-Benz sold in Japan because the differences in specifications are so vast.

The reason cars differ in specifications across markets can be contributed to a range of reasons, including consumer preference, market position and the specific needs of the market it is sold in. Cars sold in Australia are engineered for the Australian climate, roads and lifestyle.

This includes having an engine specification and cooling systems to cope with Australia’s hot climate, towing requirements and fuel quality. It also includes having specifically calibrated convenience items such as sat-nav, air-conditioning and infotainment systems.

In addition to this, the high-level of competition already in the Australian market means manufacturers continuously work to improve safety, security and environmental features of the cars they sell here. This ensures Australians are getting world-class cars, built for Australian conditions, at globally-competitive prices.

For over a year now, the FCAI has expressed its opposition to any move by the Federal Government to compromise existing safety and specification standards by allowing the personal importation of motor vehicles.

Such a change would transfer the risk of buying a car from dealers to consumers, many of whom do not have access to all the necessary information needed to compare car specifications, safety regulations and price.

Further, personal imports would be outside the established brand network and all of the peace of mind that it delivers—servicing, support and warranty assistance.

As I have said before, the reality is that new car prices in Australia are competitive compared to other right-hand drive markets around the world and affordability is at record levels, according to CommSec.

If the Government or the media are so concerned about car affordability for all Australians then we would welcome a conversation on that, which would include the tax arrangements imposed on new motor vehicle sales.

Taxes and other government charges make up around 20 per cent of the price of new cars in Australia. Fixing those tax arrangements, including the poorly-designed Luxury Car Tax, is a better and more targeted way of addressing car affordability than a change that will only ultimately hurt consumers.

 

This response expands on a letter to the editor from FCAI Chief Executive Tony Weber, published in the Australian Financial Review on 20 April 2015.

 

For further information contact:
Sheena Ireland, Communications Manager
P: 02 6229 8221
M: 0458 038 555
E: sheena.ireland@fcai.com.au