New car buyers taken for ride with prices unchanged since 2008

THE dollar is soaring and car sales are dropping, yet Aussies are still paying more for new cars compared to US and UK drivers.

cars

THE dollar is soaring, car sales are plummeting and competition is at an all-time high - in theory it couldn't be a better time for car buyers to grab a bargain.

But CPI data from the Australian Bureau of Statistics reveals new car prices have remained virtually unchanged since December 2008.

This is despite the dollar gaining 50 per cent against the greenback, 40 per cent against the euro and 30 per cent against the yen in the same period.

And while the dollar continues to punch above its weight, Australians continue to be ripped off on the price of new cars compared to motorists in the UK and US.

A new Toyota Corolla, for example, will set Australian motorists back $24,490 with on-road costs. The same car leaves UK showroom floors at $20,587 and an American pays $17,770 - or about 27 per cent less.

Australians have always paid more for high-end cars thanks to the luxury car tax and other charges.

But in the small and mid-size market, where margins are said to be slim and manufacturers supposedly make their money in after-sales finance, servicing and parts, Australians are being gouged.

Motor Traders Association boss James McCall said one of the reasons manufacturers had not dropped their prices in line with the rising dollar was to recoup losses from the global financial crisis.

He said supply had also become scarce following the tsunami in Japan, which produces about 30 per cent of new cars sold in Australia.

"I would say they've been playing catch-up," he said. "Gradually over time if the dollar stays up I would expect prices to start coming down."

Car companies in Australia buy their stock from the factory and compete on price with their much larger counterparts overseas.

This smaller buying power, the industry says, is one of the reasons Australians pay more. Cost is another.

"There's a fixed cost in getting a car to market in any country and the more vehicles you can sell in that country the more cars you have to spread that cost across," car industry analyst and GoAutoMedia publisher John Mellor said.

"I would be surprised if the car companies are ripping off Australians because this market is so competitive."Kia Australia national PR manager Kevin Hepworth said there were many "complex" reasons why we pay more.

But he said one of the biggest reasons cars appeared cheaper was because overseas dealers had "a much less regulated sale price than Australia".

"The price you see out of the US is thousands less than what you can drive away with," he said.