Carmakers deny taking Aussies for a ride

THE car industry has fiercely defended its pricing against comparison with overseas markets.

luxury cars

THE car industry has fiercely defended its pricing against comparison with overseas markets which shows huge differences in the cost of cars in Britain and the US, especially among the luxury brands.

It said cars had never been more affordable and price disparities, which can amount to tens of thousands of dollars on popular luxury models, were due to Australian taxes, the size of the market and the better specification levels offered here.

Research by The Weekend Australian shone a light on the gulf in prices on a range of cars, from a Volkswagen Golf to the most expensive Range Rover.

Differences in the starting prices for a BMW 320i amounted to almost $25,000 compared with the US while for a Mercedes-Benz E250 CDI it was more than $43,000.

A spokesman for Mercedes said it was easy to be misled by headline prices, which made no allowance for the level of features in each car or factors unique to Australia. "The factors are the luxury car tax, transportation costs to Australia, distribution costs in Australia, import duty, GST and equipment levels. There is no one thing," Mercedes spokesman David McCarthy said.

Standard equipment levels here were far better than in overseas markets such as the US, he said, while no other developed market had the same tax regime with a 5 per cent import tariff, 10 per cent GST and 33 per cent luxury car tax.

"I understand why people make the comparison, but it's not apples with apples. The fact is our cars are more affordable now. You have to use a measure and it's average weekly earnings."

The chief executive of the Federal Chamber of Automotive Industries, Tony Weber, said affordability of vehicles was at an all-time high.

"Cars are substantially cheaper than what they've historically been. But we'd like to see the LCT removed -- it's a distortion to the market."

The LCT rate, which applies above a threshold of $60,316, was raised to 33 per cent in 2008 and affects more Toyotas than Mercedes.

Mr McCarthy said despite the tax regime, Mercedes had led the way on offering better value.

"If you are too expensive, if you don't offer value, buyers don't beat a path to your door. But we've increased our sales and our market share because of the way we price and specify our cars.

"We're not charging too much for the vehicle. We're in business to make a profit, we're not ashamed of that. The people who buy our cars also understand that."