US Car Prices

[chromedome]

I realise this may start a rant, but here goes...

I often read complaints about how much cheaper etc. cars are in the US so I thought I would use my otherwise pointless global conference call time to do some rudimentary research.

I went to bmwusa.com and specced up an M4 to the same as what I have ordered. Total MSRP $83K

I picked a random state, Arizona and faked up an address in Scottsdale. Total Registration in Year 1 is $1480, add 5.6% sales tax $4600

All up its around $89K which at current rates of 0.70 that makes it around $127K AUD.

A new M4 is $149K plus local rego and dealer delivery, so in QLD this means around $5.5k rego (inc. stamp duty) and dealer delivery is around $5K (yes really).

So drive away its around $160K or about $23K more than the US.

This to me is not a significant difference - am I missing something?

- Take into account that the only major RHD markets are the UK, AU, IN and ZA which probably account for less than the US market.
- There are local compliance costs (ADR etc.) but this is already accounted for in the US cars - it can be spread across more sales in the US then in AU.
- There is probably a higher local cost given the higher wages etc. in AU vs. US

[domino_z]

A few things, the m4 fully loaded was nudging 200k up until recently when BMW Australia lowered their rrp, not BMW Germany

Also up until recently our dollar was doing much better against the USD

25k saving at today's rates is all relative, some may find that pretty significant, would definitely cover cost of ownership over lifetime of vehicle

Imo it's only when you start looking at cars 200k+ where the US vs AUS price issue becomes large enough

Now if you compare the price of a new aventador ....

[simpelton]

127 and 160 is 33k difference. Significant, well, let's look at demographic this car is made for, 20's and 30's which will be representative in the US. Here in ANZ, the opposite, not only will majority of buyers be older, a lot will not be car enthusiasts so you kill the market. 33k to a young crowd matters, it matters to me!!

Thank fully the last gen c63 creamed the m3 in sales and BMW responded and I can squeeze into one.

As for the math, at 55c to the USD, yes difference is fair or arguable, we pay double but to domino_z's point, at parity it made no sense, was simply gouging by the parent companies.

Volumes, almost a non consideration. The cars travel on carriers that trot the globe, on ever increasingly efficient ships so distance to Australia is near negligible. ADR rules, again today, cost to comply, near zero.

Anyway, LCT is on its death bed and should disappear with Ford, GM production. Import duty is almost dead, European cars with standing and late this year cabinet decides on parallel importing of cars with less than 5k on clock.

An M4/M3 should not be selling (rrp) for more than 125k at a 75c to USD which is the approx mean rate since float.

With LCT and import duty disappearing, an Aventedor should come down. Why would you own one, give me a LA Ferrari or P1 please. A veyron will do as well

[Mike_SSV]

Always a lot of focus on AUDUSD spot rate when discussing car prices.

Car makers have very long dated FX hedging programs - they would start as far out as 7 years and slowly average in over time.
When our AUD interest rates were high, we had very big interest rate differentials vs. EUR and USD. This makes the rate worse for importing into Australia.

Now with more favourable interest rate differentials (and a weak EUR), car makers have got room to lower prices which is what BMW have done.

Granted I still think they have some room to move, I've read a 3 series and a Mondeo cost a similar amount to procedure.
AUD 125k for a M3 would be fair value in my book.

[Zoo Tv]

The difference is largely the luxury car tax - the value of the AUD plays a part, but as Mike_SSV said - it is hedged long and averages over time. BMWAUS is no different to anyone else selling product, they need to be competitive and profitable. I.e - they will be as profitable as they can be whilst being competitive.

I was all excited moving to New York given that I could lease an M3 starting from $820 USD a month.......but then you have Manhattan parking - non-existant unless you pay anywhere from $500-$1200 a month to garage.... It's all relative.

[simpelton]

Yeah and you have Manhattan salaries, but regardless, 1200 + 850 per month and your still probably comparable to Aus and your not living in Manhattan. I've heard/read some of the best driving roads in the US are up and down the coast from NY state. It's all relative, let's hope Turnbull can turn (pun intended) things around bringing some of his commercial sensibilities to the fray

[Zoo Tv]

Originally Posted by simpelton

Yeah and you have Manhattan salaries, but regardless, 1200 + 850 per month and your still probably comparable to Aus and your not living in Manhattan. I've heard/read some of the best driving roads in the US are up and down the coast from NY state. It's all relative, let's hope Turnbull can turn (pun intended) things around bringing some of his commercial sensibilities to the fray

We can only hope with Turnbull - however, I should also mention part of the reason it's still cheaper here (Manhattan salaries aside) is the interest rate. BMW currently offers 0.9% on 2015 M3's and 1.9% finance on 2016 M3's.....

[Mike_SSV]

Originally Posted by simpelton

Yeah and you have Manhattan salaries, but regardless, 1200 + 850 per month and your still probably comparable to Aus and your not living in Manhattan. I've heard/read some of the best driving roads in the US are up and down the coast from NY state. It's all relative, let's hope Turnbull can turn (pun intended) things around bringing some of his commercial sensibilities to the fray

Sydney CBD parking is at least $500 per month, typically around $800.

[Øzzy]

Originally Posted by Mike_SSV

Sydney CBD parking is at least $500 per month, typically around $800.

OMG $800 is almost a mortgage repayment here in Brisbane