Let’s take a look at one of my favourites. A car that I would have like a shot, given a lottery win and a 5 car garage. A Jaguar XFR. New, it’s an eye watering $189,000, thanks to our government’s luxury car tax, apparently. The price in the UK is £65,350, which at the current exchange rate equates to $83,000.
I realize that this tax is apparently there to save the local car industry, but this is a joke. This is a premium of over 100% and who receives that? Does it all go to the government or have the car companies just screwed us for all we are worth? The car companies claim that they price their cars a year in advance so as not to be dictated to by fluctuating exchange rates.
Fine, so how come the Aussie dollar has remained strong for 4 years now with no hint of a change anytime soon and car prices have not decreased one iota?
In Drive’s April 2011 article (http://news.drive.com.au/drive/motor-feature/a-quick-buck-the-high-price-of-luxury-downunder-20110415-1dgy7.html) most people believed it was the fault of the government according to their poll, rather than the car companies. But that doesn’t stack up 3 years later.
BMW said at the time, ”We do hedge to protect against currency movements going both ways. We don’t put prices up when the currency is weak and neither do we respond immediately by putting prices down when the currency is strong. We have to hedge against these kinds of fluctuations for the customers’ benefit [so new owners don’t see their car discounted just months later]. As a manufacturer, we’re not actually in a position to capitalise on a strong Aussie dollar – at least not in the short term.”
So when is it no longer the short term? Can we expect then to see a price cut in the next year, two? I totally understand that if you had bought new you would not want to see the price depreciate by half, the very next day. But come on, are we really that stupid that we will just put up with the status quo and pay twice as much as the UK and even more compared to the US? Do new car buyers really have more money than sense? I tend to that think that the wealthy have money because they are astute and so paying through the nose for a car does not add up.
Eventually there must a ground swell of support for a price decrease. There is with everything else. People are buying off the net for goods they can get from their local Harvey Norman because they can benefit from the strong dollar. And rightly so. Surely we have to start thinking this way when, for most people, the second most expensive product they will purchase is their car.
Until then, buying second hand in this climate has to be the sensible option.