New car buyers taken for ride

CPI data from the Australian Bureau of Statistics reveals new car prices have remained virtually unchanged since December 2008.

This is despite the dollar gaining 50 per cent against the greenback, 40 per cent against the euro and 30 per cent against the yen in the same period.

And while the dollar continues to punch above its weight, Australians continue to be ripped off on the price of new cars compared to motorists in the UK and US.

A new Toyota Corolla, for example, will set Australian motorists back $24,490 with on-road costs. The same car leaves UK showroom floors at $20,587 and an American pays $17,770 - or about 27 per cent less.

Australians have always paid more for high-end cars thanks to the luxury car tax and other charges.

But in the small and mid-size market, where margins are said to be slim and manufacturers supposedly make their money in after-sales finance, servicing and parts, Australians are being gouged.

Motor Traders Association boss James McCall said one of the reasons manufacturers had not dropped their prices in line with the rising dollar was to recoup losses from the global financial crisis.

He said supply had also become scarce following the tsunami in Japan, which produces about 30 per cent of new cars sold in Australia.

"I would say they've been playing catch-up," he said. "Gradually over time if the dollar stays up I would expect prices to start coming down."

Car companies in Australia buy their stock from the factory and compete on price with their much larger counterparts overseas.

This smaller buying power, the industry says, is one of the reasons Australians pay more. Cost is another.

Read more on www.perthnow.com.au