Hiking the price !

We are certainly paying much higher prices here than the same items offered on the American market when it comes to the field of electronics and music, but that differential is even more glaring when applies to automobiles.

At the lower end of the car market, a Nissan Pulsar sells here at $ 19,990, but it's American price is just $ 16,140.    The gap widens as it applies to high end luxury cars.    The BMW 320i will set us back $ 58,600 and yet the American price sticker is just $ 35,805.    At the top of the market, the Mercedes C class has a differential of $ 67,900 to $ 35,350.

The car industry blythely tells us that price difference is relative to our laws that stipulate that cars drive on the left side of the road.   Most of the rest of the world drives on the right side of the road and it is more costly to produce vehicles in smaller productions runs for our market.

That doesn't seem to add up.    General Motors Australian plants have produced cars for export - and of course these have had to be in left hand drive mode for both the American and European markets.   Despite the transport costs of sending them overseas, they retailed at a cheaper price than their right hand drive equivalent here in Australia.   These export cars represented a smaller production run than those made for sale in this country.

For a very long time, hiking the price in Australia has been a cozy little scam that was masked by a sharp difference in the trading value between the American and Australian dollars.    When the Australian dollar fell to an exchange of about seventy cents some years ago, most people accepted price variations without checking too further.    Today - with the values almost even - that mask of deception has been torn away.

The real reason we have a price differential - is " Because they can " !

" Take it - or leave it ! " is the buy option that applies.   The price of foreign made cars in Australia has been falling as both the Australian dollar strengthens and the competition hots up.   The entry of both South Korea and China into the new car market has forced prices downward - at the same time that it has forced car makers to add refinements at no extra cost.    Few cars today come without power steering, safer brakes, air conditioning - and a five star crash rating.

Makers will find it harder to explain away the price discrepancy in electronics and music.   Few of these items are actually produced in America.   Manufacturing is tasked to sweat shops in China - and there is no left hand - right hand drive excuses for these items.

We have just seen a colossal battle between two electronic giants over patent protection.  Expect more of that in the future as new players enter the field - and countries like India, Pakistan, Bangladesh and Indonesia use their low cost labour force to become players.

It seems that an overwhelming force is moving towards price parity !