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DON T expect new car prices to fall suddenly from 5 percent now that a free trade agreement was signed with Japan, where 35 percent of all new vehicles sold in Australia come from but you might additional equipment.
In fact, if the value of the Australian dollar takes a dive and or the Japanese government decided to stop the Japanese Yen depreciate to boost exports, prices of Japanese cars could actually increase.
The exchange rates between the Australian Dollar and Japanese Yen rose by 60 percent over the past 10 years, much more than the difference of 5 percent, we're supposed to be getting excited, and when all the odds are in our favor.
Aside from the fact that no one pays full price for new cars these days, the RRP of popular Japanese cars are already the lowest in 20 years.
The Toyota Corolla and Nissan Pulsar begin to 19990, the same price than two decades ago despite being larger, safer, more efficient and loaded with extra equipment.
In addition, it is important to note that the tariff reduction of 5 percent comes from the price of the car outside the gate of the factory.
Thus, using a 19990 car for example, and taking a guess at the wholesale price of the car when it is unloaded off a ship, the reduction of 5 percent will come off the landing price, say 15 000 and 5 percent of 15,000 is just 750.
Then add 10 percent of the GST, the wholesale margin, the dealer's margin and transport costs and find yourself somewhere near 20,000 the price of retail car before are added on costs the road.
So where's your 750 discount, we hear you ask Well, we already have a practical example of where it will likely be extra equipment at no extra cost.
The Toyota Corolla hatch is currently manufactured in Japan and costs 19990 Toyota Corolla sedan is now made in Thailand with which Australia already has a free trade agreement, so it is not hit with a 5 fare for percent and is more expensive than 20700 hatch.
This is because the sedan has a rearview camera and standard rear parking sensors and hatch Toyota chose not to adapt interesting features security rather than reduce the price.
Now that a free trade agreement was signed with Japan, Do not be surprised to see Toyota make the same changes to the Japanese-made trap, adding additional equipment instead of reducing the price.
One of the cheapest cars on sale in Australia a 2014 Suzuki Alto Supplied Source.
Then there is the issue that some Japanese cars aren t actually made in Japan Did you know that the Suzuki Alto, 11990 one of the cheapest cars on sale in Australia, a Japanese badge but is actually India.
The same goes for the Nissan Micra 12990 used to perform in Thailand and Indonesia and now comes via India gift So you expect a discount of 5 percent on cars.
And most Japanese brand utes the third largest category of vehicles in Australia as the Toyota Hilux and Nissan Navara, come from Thailand already benefit from a free trade agreement.
There may be more wiggle room on the price of the most expensive cars from Japan, but automakers are careful not to destroy the resale value.
They go to great lengths to keep prices constant, often riding the currency so that people themselves wave don t lose much money on their cars and we hope to return to buy another, earlier.
If prices were to plummet as the government would have us believe, then guess what your car is suddenly less valuable to trade in time.
For example, how would you feel if you paid 40,000 for a Japanese car and then, two months later, your neighbor paid 38,000 for the same model.
You just tore an extra 2000 on the resale value of your car, and your neighbor is because 2000 before 38000 will become the price of the car is judged against.
There is no doubt the free trade agreement is ultimately a good deal, but this is a case of be careful what you wish for.
Why car prices are not cheaper prices, cheaper Free Trade Agreement.