There’s never been a better time to buy a new car!
That might sound like something a car salesman would say just before ‘Come on down!’, but it’s actually true. New car prices are the most affordable in over three decades.
A study comparing average incomes with new car prices has made this startling discovery, but is it really that surprising? The strong Australian dollar, steady wage growth and falling tariffs have made imported cars more attainable than ever.
Improvements in technology have also contributed and, when combined with fierce competition, prices are being squeezed like never before.
It’s not just Japanese and Korean cars that are cheap either. Car insurance statistics also point to an increase in the number of luxury cars being purchased such as Mercedes, Porsches and BMWs.
While all this is great news for car buyers and car insurance companies, it’s just more bad news for Australia’s struggling car makers.
Australian car manufacturers receive billions of dollars in government subsidies to keep them afloat, but competing with imports from countries where labour is cheap, is a losing game in the long run.
There are those who argue we should stop propping up untenable industries and let the market take its course. New Zealand did just that when it began mass importation of used cars from Japan and other countries. This quickly led to the demise of the New Zealand new car assembly industry.
Australia is a different story, however. Unlike New Zealand, we have the skills, developed over decades, to design and build quality cars from scratch. Can we really afford to lose all that expertise -- not to mention the 55,000 jobs in car manufacturing and another 50,000 in the satellite industries?
The three remaining players in the Australian industry, Ford, Holden and Toyota, produce about a quarter of a million cars a year between them, down from almost twice that number a decade ago when they held a 30 per cent share of the market. Today that share is around 15 per cent and is expected to continue declining.
So what can we do to reverse this downward trend? Continue throwing billions of taxpayer dollars at it? If a recent poll is anything to go by, many Australians certainly believe so. More than 68 per cent of those polled support the current levels of government funding.
The government’s thinking appears to be that the car industry needs time to adjust to the new situation it finds itself in and requires financial assistance to help it do so.
There is also the argument that the demise of car manufacturing would be the thin end of the wedge. The Australian manufacturing industry in general, which employs a million workers, is going through tough times due to the same factors that are threatening the car industry. If we abandon the car industry, would our entire manufacturing industry be next?
One reply to this argument is that the manufacturing industry has actually been adapting to its changing circumstances, moving away from making the kinds of items it has traditionally manufactured and retooling to supply growth industries such as mining and agriculture.
Whatever the answer is, the debate over funding the struggling Australian car industry will continue for some time yet and, in the meantime, car buyers will continue to reap the benefits, with access to the most affordable new cars in 30 years.