The good news about car affordability in Australia
Fleetcare’s Global Affordability Index is certainly an eye-opener with its comparison of car prices around the globe. It shows that while Aussies are paying about the same price for smaller economy cars as car buyers in other countries, it’s another story when it comes to utes and luxury cars.
Such big disparities hardly seem fair, but it’s not all bad news. A bit of history gives an interesting perspective to Australian car prices. Comparing the dollar values of cars over time tells us little about their value compared to the weekly wage of average Australian workers. To get an idea of their real affordability you need to look back at how many hours of work would be needed to buy a car then compared to today. It tells an interesting tale of dramatically improving affordability.
Shrinking work hours per car
Take the once popular Ford Falcon for example. When the Falcon first hit Australia’s roads in 1960 it took a man on the average male wage the equivalent of 60 weeks’ wages to buy it. By 2014 the same base model Falcon would have cost just 25.9 weeks’ wages.
Holden’s first model, the 48-215, or “FX” sold for $733 in 1948. That might sound laughably cheap today, but it represented an extraordinary 94 weeks wages for the average worker. By November 2014 a Holden Commodore Executive V6 would take an average worker just 27.9 weeks to pay off.
It’s a similar story for luxury cars. Back in 2004 a BMW 318i four door auto would take an average worker 55.2 weeks’ of toil to buy. A decade later, in 2014, it was down to 41.4 weeks.
The comparative price drop for Porsche Boxsters is even more dramatic. In 2004 a person on average wages would be working 121.5 weeks for their Porsche. By 2014 that had shrunk to just 72.8 weeks. At this rate we’ll all be popping down to the shops for a carton of milk and a new Porsche Boxster in no time at all.
Prices of vehicles are stable
Even in dollar terms car prices have been remarkably stable for at least a decade. In 2003 you could buy a Toyota Corolla for $21,840. A decade later that Corolla would set you back just $22,990. Back then an Audi TT 2.0L Coupe would cost you $74,100. A decade later it would cost just $75,050. In 2015 the price of Mazda’s superb little MX5 started from just $2440 more than the original model introduced in 1989. Its most expensive model was actually $310 cheaper than its equivalent in 2005.
Prices of vehicles falling
The Mazda MX5 isn’t alone. Many cars have come down in price in that time. The Porsche Carrera 911 manual has dropped from $225,300 to $206,500. The BMW 320i auto has fallen from $66,500 to $58,600.
In fact cars are the most affordable they’ve ever been. Wages growth, increased competition, the strength of the Aussie dollar and record low interest rates have all contributed to that happy state of affairs.
It’s not just marketing hype, it’s true – there’s never been a better time to buy a new car!
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