BMW Pricing (Pillaging) in Australia

Years ago Australia had a very protectionist motor Manufacturing policy, now we have a milder version. This previously meant that luxury cars from Europe and elsewhere were legitimately expensive. Now they are expensive because the manufacturers like BMW, Mercedes, Audi and Lexus are generating or retaining large margins on sales. The cost of vehicles in Australia will always be a more expensive than in the larger markets because of economies of scale and compliance/transport costs. But they do not explain pricing differences of this scope; it is pure consumer gouging.

Many Australians blame the Government for the high cost of these cars, and the Luxury Car Tax does have an impact at “high” levels – but the example below does not attract any LCT!

BMW

320d Sedan

UK
Australia
Net
23,250
Vat
4,650
GBP
Total*
27,900
BMW List Price
59,700
Dealer Delivery
3,000
Luxury Car Tax
0
(GBP=AUD1.54)
=AUD
42,966
^
62,700
+46%

* Includes delivery, BMW emergency service, number plates,first registration and vehicle excise duty.

^ Does not include state registration costs or Stamp duty.

Happy for BMW to respond and show why it’s not really a 46% differential, and that additional costs eat up most of the difference.  Or are they making losses in the UK?

If the high prices are a consequence of a real, heartfelt concern (!) that realistic pricing will affect used car prices then don’t worry chaps, I know what the response of most Australians will be to that argument.

Now lets look how the AUD has performed against the Euro in the last three years – given that most luxury cars are still European sourced ..

Some scope for price reductions … obviously NOT!

Next up, we will have a look at spare parts pricing, which should be interesting … also, it would be fascinating to see what the companies claim that landed cost of their cars is? That would tell you whether we are being gouged by the manufacturer, or manufacturer and retailer combined. Also, it would indicate whether the companies are “transfer pricing” their margins out of Australia for tax purposes.

Postscript 1 – there has been some more recent debate on BMW pricing in Australia where the BMW PR manager says the difference in pricing is the result of differences in specifications – in the case of the 320d some Euro14,300 worth!  There are two large rivers of gold for media organisations in Australia – real estate and motor vehicle advertising – and the quality of journalism suffers significantly in both areas. You judge the quality of the journalism.

Postscript 2 – Dealers are saying they don’t make big margins on car sales, just on servicing and spares!! What chance then that the BMW, Mercedes, Audi etc., of this world “buy” their cars through BMW Asia, Mercedes Asia …. and the price difference between here and Europe is made in an offshore low tax regime.  So, while “dumping” is illegal, the absolute reverse isn’t?

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One Response to BMW Pricing (Pillaging) in Australia

  1. ABC says:

    For most models you can order BMW spare parts out of the US, and they arrive in 3-5 days. After costs, you can save more than 50% – but there are rumours BMW are trying to restrict supply out of the US.

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