Car prices lower in Australia

A NEW study has shown that new and used vehicles are more expensive in New Zealand than in Australia, undermining the ongoing push for the lifting of restrictions on the importing of both categories of vehicle.

The federal government has already made a decision to keep the restrictions on used imports, but there has been a constant stream of agitation to change the decision.

It is yet to make a decision on parallel imports of new vehicles.

The new study, which has been drawn up using correct statistical methods, shows that there are some surprising differences in price between identical vehicles in the two markets.

The new study was conducted by Steve Bletsos, the new senior research analyst of the Victorian Automobile Chamber of Commerce, to try to dispel some of the myths that interested parties have been peddling on the issue, according to VACC chief executive Geoff Gwilym.

“Ever since the government made a decision not to allow importing of second-hand cars, there’s been a bit of media on the issue, including comments from Ian Harper.”

Professor Ian Harper conducted the 2015 review of Australian competition policy and recommended the government allow both the importing of used vehicles and the parallel importing of new vehicles.

“So we’ve bounced back on this issue because there is a continuing press from some quarters. You can argue well, why don’t we just say nothing? “Well, it’s because we are fed up with it,” Mr Gwilym said.

“Most modern economies are trying to reduce the CO2 impact of the vehicles in their communities: NOx, CO2 and emissions in general.

“What you really want to be doing is encouraging your consumers to be buying new cars with new technology that lessens their impact on the environment.”

Mr Gwilym said that would-be buyers are lured by the prospect of having something different or just cheaper.

“The downside is orphan cars, cars you can’t repair, cars you can’t find bits for,cars dealers can’t service.”“Unfortunately, what will happen in real life is that when people find out their car is not quite like the one they could have bought here, they still will want to take it back to that dealer to get it repaired or serviced, and then the dealer will be stuck with the problem of trying to find parts and technology for a car that is not normally imported into Australia,” Mr Gwilym said.

He said buyers often do not realise an outwardly identical car in Europe will not cope well with lower-grade fuel in Australia, or that its air-conditioning unit is inadequate.

Mr Bletsos compared vehicle prices in New Zealand and Australia because of the similarities between the two countries.

“New Zealand has a similar demographic. It has similar consumer behaviour. They buy similar vehicles, have similar spending patterns so, yes, it makes sense,” he said.

He said prices in NZ were still a lot higher than in Australia even though NZ had deregulated its market in 1997, prompting the closure of assembly plants.

“It goes to show how high they must have been in the first place.”

Mr Bletsos said each vehicle’s price in the study was a median price drawn from a representative group of that model. He only compared identical models between Australia and New Zealand and the used vehicles had to have covered around 30,000kms.

“NZ is cited quite often as an example where parallel importing works (to reduce prices) and our research shows it obviously doesn’t work and there is little to be gained by us as a nation by going down that path,” Mr Bletsos said.

In 2007, NZ tightened up its laws on used imports, prohibiting the import of any car made before 2007. However, before that change was made, the average age of the NZ fleet had deteriorated from 11 years to 14 years.

The research showed a Toyota Corolla Ascent with 30,000kms on the clock was valued at $A18,879 in NZ compared with a median price of $16,000 for exactly the same specification in Australia.

A Hyundai i30 Active hatch auto with 30,000kms was valued at $A21,287 in NZ, more than 30 per cent or $A4987 more than the same car in Australia.

Mr Gwilym said the research results also vindicated the chamber’s opposition to the introduction of parallel imports of new vehicles. This is where a third party imports a new vehicle obtained overseas and sells it outside the normal distribution and dealership channels in Australia.

The research showed a shocking difference in prices between the two countries.

A new Toyota Corolla Ascent automatic sedan costs the equivalent of $A32,398 in New Zealand, a massive 38 per cent or $A8958 more than in Australia.

A Mazda3 Neo hatch auto costs $A30,365 in NZ, which is 22 per cent or $5,513 more than in Australia.

At the top end, the price differences are still considerable, even though vehicles at this level attract the luxury car tax in Australia.

An Audi Q5 diesel quattro costs $A103,240 in NZ and $A79,050 in Australia, a margin of 31 per cent.

Mr Gwilym said that, if the government was earnest about reducing new-vehicle prices in Australia, it should get rid of the luxury car tax (LCT).

“If you want to get prices going down, the government should get rid of the LCT.

The LCT is the swiftest, most effective way of reducing car prices in Australia.

“We know they only apply to a certain range of vehicles but farmers and business people drive a lot of those vehicles.

“They are used as commercial vehicles in a lot of cases, and the LCT is a barrier that we have still got.”