Australians ‘ripped off’ on luxury car pricing, dealer says
BY BARRY PARK | 12th Aug 2014
In a rare look behind the veil at a part of the Australian new-car market that does not often speak its mind in public, Brisbane-based Motorline chairman Lynton Rose savaged a Federal Chamber of Automotive Industries (FCAI) report released last week that claimed Australian buyers were not paying over the odds for vehicles.
The FCAI is the peak industry body for automotive manufacturers and importers in Australia, representing them on issues such as luxury car tax, changes to novated leasing and even how vehicles are serviced.
Mr Rose’s Motorline, meanwhile, sells BMW luxury cars, as well as Mini premium cars.
Mr Rose has told GoAuto that he believed there was no reason why he could not sell a top-of-the-line BMW 7 Series in Australia for around $120,000 – an almost $200,000 saving over current pricing – but for the pricing policies of the luxury car-makers here.
“Australians are being ripped off on pricing and that is easily proven by the simplest of investigations,” Mr Rose said.
“This is not an issue of a one or two or three thousand dollars’ price difference between markets and variance in specification – this is about the big picture of an extremely excessive high-pricing policy for cars sold into the Australian market.
“You only have to ask one question. If the manufacturers are so wonderful with providing pricing parity for Australia when comparing it to the world, why commission a report to justify their position? “I don’t think a day goes by and someone doesn’t come into the dealership and tell us our prices are outrageous compared to overseas,” Mr Rose said.
“We’ve been ripped off for years. We could have had everyone that is driving a Holden Commodore driving a BMW 3 Series or a Mercedes-Benz C-Class – and what’s the better car? “There’s no debate. All we are doing is depriving ourselves as a nation of the best.” Mr Rose said the FCAI report, which claimed a mix of mainstream and luxury cars sold in Australia were as cheap, if not cheaper, than equivalent cars sold in Britain and New Zealand, was a thinly veiled attempt to protect the Australian car industry from grey imports – a move suggested under a Productivity Commission report into the post-manufacturing new-car industry.
The commission’s inquiry into Australia’s ailing car manufacturing industry suggested the government could start lowering restrictions on importing second-hand cars – the so-called grey imports – once Ford, Holden and Toyota have exited from Australian manufacturing by late 2017.
“The European manufacturers know that the party would be over as far as new-car pricing for Australia is concerned should grey imports be allowed,” Mr Rose said.
“By the way I am not in favour of a grey import policy but I am in favour of getting world-best prices for Australian consumers, of which I am one.
“Why are the car manufacturers now jumping up and down about it? Because they want to protect the money that is here.” Mr Rose said the FCAI’s claims were all “smoke and mirrors” and “easily disproven”.
“Go and have a look at (British BMW dealership) Park Lane, which is the factory outlet in London, and pick up the prices straight off their website,” he said.
“Compare it with any dealer in the US go and pick up Atlanta BMW, they have all the prices on there.” Mr Rose said the price of luxury cars in Australia tied into to the international head offices of the car-makers.
“The crap that Australian representatives feed you (about how prices for BMW products are set) is exactly that, it’s just rubbish,” he said.
“In particular with BMW, everything that happens is, ‘Oh, it’s Munich’.
“If you get the guy from Munich, he says, ‘No, no, no, that’s not true, that’s not true at all, they shouldn’t be saying things like that’.
“But it is typical corporate people in big business – it wouldn’t matter if it was BMW or Qantas, or you name it – they just blame somebody else that you as an individual can’t get to.
“You can’t prove it so you can’t have the discussion about it, it’s as simple as that,” he said.
BMW Australia corporate communications general manager Lenore Fletcher said the car-maker had helped the FCAI with the study.
“I think the big difference when you look at Australia, our cars tend to be a much higher specification (than cars sold overseas), so our vehicles have a lot more specification in them than for a lot of vehicles, say, in Europe, where they are a fleet vehicle,” Ms Fletcher said.
However, she declined to say if BMW would sell more cars in Australia if their prices were more closely aligned with some international markets.
The FCAI report looked at a number of luxury marques and compared the price of vehicles including Audi’s A3 hatchback, A4 sedan and Q5 SUV, a BMW 3 Series sedan, Mercedes-Benz A-Class hatchback, C-Class sedan, A45 AMG performance hatchback and ML-Class SUV, as well as the Land Rover Freelander and Range Rover Evoque small SUVs and Range Rover Sport large SUV.
All were priced within about 10 per cent of the British equivalent of the vehicle, according to the FCAI data, with only four vehicles slightly more expensive than their UK counterparts.
FCAI managing director Tony Weber said comparing the ticket price of a car in different markets was often not a good indication of how well they stacked up against each other.
“You’ve got to compare apples with apples,” Mr Weber said. “Cars are specified to substantially different levels in different markets, and we typically have a very high specification level in Australia.
“We’ve seen all these numbers, and you can buy a number of cars that are the same car, but with different specification, but much cheaper in other markets.
“That’s why we went to so much trouble to go and get the independent analysis from Polk IHS and then went and got our members to double-check that to make sure we are comparing apples with apples.” Mr Weber said the FCAI could not cross-check the prices of all 350 models on sale on the Australian market, nor could it weigh Australian pricing against every other overseas market.
“We don’t dispute that there are examples out there where the cars are cheaper overseas,” he said.
“Those examples are on our list. But you’ve got to do a much more thorough analysis than a quick analysis.” Mr Rose said Australia’s government should step in and force luxury car-makers to price vehicles in line with other international markets.
“They need to get these people, and hit them, and say to them, ‘Look, here are the prices in the world, you’re gouging Australians, that’s to a higher cost of living which in turn is putting cost pressure on Australians, which is upsetting the apple cart’. Now, we want world’s best prices, or we’re going to fine you’.
“Why should you or I be deprived of driving a 7 Series because we have to pay $300,000 for it when overseas they buy it for $100,000?” Mr Rose said if the likes of BMW and Mercedes-Benz had to bring Australian car prices in line with other world markets, their large corporate headquarters here would be decimated.
“They’d just have to shed staff,” he said. “And so they should, because they’re a sales company, they’re not a manufacturer.
“If you or I could go to Munich and get the import concessions to get the cars here, do you think we would have a Taj Mahal (corporate headquarters) down the road like BMW or Mercedes-Benz? “There’d be no way we’d just about have to sell them out of the back of the garage at home at 20,000 cars, keeping things as lean and mean as we possibly could.”
