[snowcherry]

not sure if this has been noted anywhere
from today (May 25th) changes to the component pricing and Vehicle advertising take place under the Trade Practices Act in Australia.

the amendment was made to supposedly make it easier for the consumer to see the full final price on vehicles. if a manufacturer advertises a RRP they must also include a drive away price and not hide the dealer charges etc. well this is my understanding of it though i still find it a bit confusing actually.

http://www.accc.gov.au/content/index.phtml/itemId/322968

an article about it here http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleID=63095&IsPgd=0

Hyundai don't seem to be doing much about it thus far and are still showing RRP only from the looks of it

[Dazzler]

Sounds like a good move going forward.. I know from first hand experience that some dealers "play" with the dealer delivery fee...

[blawler]

Yeah, BMW took all the prices off their website today. Stating to contact the dealer for a price.

[Jen]

Although I can see where the amendment comes from, the flip side is that the onus has been put on the car manufacturer to provide information which they should not reasonably be made to provide. This move will not mean the manufacturers will fix the dealer delivery charges (they can't do this because of other sections of the TPA and because dealers would flat out refuse because it is a restrictive business practice)

Depending on the state/territory the stamp duty is different (so that's already 8 different prices), depending on the dealer location it will cost more/less for transport and then you have to consider the cost of running each individual dealership as a separate business entity.

The way I see it there are three avenues available, all with pros and cons.
(1) Advertise the RRP and the most costly dealer charges determinable, however this will likely influence people negatively even if they may end up spending less at their local dealer;
(2) Incorporate into their websites the ability to enter your postcode to have indication of additional costs, however, what should they do in print or television advertising?
(3) Remove all pricing and refer a potential purchaser to their local dealer.

If you follow option (1) or (2) there is always the potential for breaching the TPA, it becomes costly to maintain the accuracy of the records and means less flexibility for individual dealers, the majority of whom operate under a completely separate business entity to the manufacturer. Consequently, I believe most manufacturer advertisements will be referring people to a dealer for pricing.

Ultimately I see this as another amendment to protect the ignorant. Apparently, the 'little guy' is so stupid our legislators believe we need to be spoon fed, that or there are some seriously gullible people in our midst.

If you want to know how much it will cost you to drive away in a car, you ask for a quote. This was the position before the amendment and it will be the same afterwards. The only thing that will change is the amount of time that it will take to research and work out if you can afford the car.

And most annoyingly, will increase the number of car salesman that have your phone number.

I'm sorry that was so long, I'm conditioned to answer questions about legislation in essay format.

[Lakes]

I Agree Jen.

[Dazzler]

Hi again Jen,

Some good points there... The "big brother" attitude of the Australian Federal & State Governments is making everything more complicated and expensive (tried to build a house lately?) but it appears to be the same overseas as well...

Think they are trying too hard to be "politically correct" and justify their positions....

[snowcherry]

good post Jen, some food for thought

i have mixed feelings about it, i know its meant to clarify pricing, but i have a nagging feeling it could sensationally backfire, and may even make dealer delivery fees worse.

at least i'm not buying yet, so hopefully any uncertainty will smooth down over next couple of months. ultimately i guess it won't make a big difference to the actual quote gathering process

I have a feeling I shouldn't ask this but if cars can be, and are, already advertised with drive-away prices... what's the difference?

I guess these drive-away prices are either done state-by-state and/or the manufacturer is soaking up any differences in the actual costs of the add-ons.  Either way they seem to have found a way to do it.  The new legislation just asks them to do it all the time.  No?

[Jen]

I have a feeling I shouldn't ask this but if cars can be, and are, already advertised with drive-away prices... what's the difference?

I guess these drive-away prices are either done state-by-state and/or the manufacturer is soaking up any differences in the actual costs of the add-ons.  Either way they seem to have found a way to do it.  The new legislation just asks them to do it all the time.  No?

No, that's a good point.

However, they are promotional drive away prices, still subject to variation. My understanding is this happens when the manufacturer wants to move stock and they do absorb some of the difference and this is all sorted out between dealers and the manufacturer on a promotion by promotion basis, ie an agreement is reached each time a new promotion is to begin. Potentially the overriding dealership agreement has written in that dealers must comply with promotional pricing for X number of days per year.

The new legislation requires the manufacturer to give the drive away price ALL of the time despite the extraordinary number of variables.

A dealer taking out their own advertising in the local paper will have no problems, they can easily quote their own drive away prices.

Other manufacturers already leave out a prices in advertising because they don't want to be held responsible if an individual retailer has a higher price. ie Mattel doesn't have the price of new Barbie in ads, so consumers don't know the price until you seek out a retailer. Kmart can have a different price to Big W, Target and Toys'R'Us.

I feel manufacturers will go the way of Mattel, not that everything will become pink, but that adverts will just avoid pricing.

Annoying for the consumer? Yes
Better than having the RRP displayed? For the ignorant consumer, Yes, but for the average consumer, No.

[Dazzler]

Can't remember the last time I didn't have a trade-in and I guess I'm in the majority...

So it ends up coming down to the changeover price for most people not the drive away or advertised price....

[snowcherry]

what is a changeover price?

now with this new system, do you think the room to haggle is the same? i'm worried that they'll just make the pricing inclusive of all charges and that is what you have to pay.

i.e SLX Auto 09 new $ 25,890 plus DD and on roads....i'm led to believe i can haggle at least DD off the price so maybe $2000 savings as an e.g.
now (looking at one car on car sales) the SLX Auto 09 new selling for $28,990 inclusive. so over $3000 higher. now are they going to say that is simply the cost or can i still haggle off the included DD?  also to note the seller saying this one is at 'demo' prices and not even full cost.

so it has me a bit worried 

[jasonw]

Demo = A few klms on the odometer, i drove a demo that had about 3000+ kms on it so you are getting a reduced price because it has been used for test drives etc.......

Change over price is basically the full price of the car minus your trade in, so for a car purchase of $29,500, i got $15,000 for my current car trade in, this leaves a change over price of $14,500 to pay to buy the vehicle.

When trading in a car it is important that you focus on the change over price, in my instance i was about $3000-$4000 short per car (in my budget anyways) to purchase the 2 x i30cw's, i was about to walk out as i really had no room to move but the dealer kept going lower and lower till basically i only had to find an additional $500 per car ($1000) instead of the extra $4000 per car based on the original non negotiated price.

what is a changeover price?

now with this new system, do you think the room to haggle is the same? i'm worried that they'll just make the pricing inclusive of all charges and that is what you have to pay.

i.e SLX Auto 09 new $ 25,890 plus DD and on roads....i'm led to believe i can haggle at least DD off the price so maybe $2000 savings as an e.g.
now (looking at one car on car sales) the SLX Auto 09 new selling for $28,990 inclusive. so over $3000 higher. now are they going to say that is simply the cost or can i still haggle off the included DD?  also to note the seller saying this one is at 'demo' prices and not even full cost.

so it has me a bit worried 

The changeover price is just the bottom line - what you pay after all negotiations and TI value has been agreed.

The actual price you pay for your car will depend not so much on the advertised price whether it be inclusive of DD etc or the new prices which include that but purely on how well you negotiate and what the dealer is ultimately going to accept.

Each dealer will probably have a different price in his mind depending on the time of the (sales) month and whether they need to sell another car to meet some target etc.  Sometimes you can get an amazing deal, sometimes you don't.  I once had a dealer drop $5k (and possibly at a loss to them to make target) if I bought that day... sadly I'd already signed with another and was just ringing out of courtesy to tell them.  Should have made that call before I signed elsewhere.  

[tji30]

I've found that dealers these days won't start negotiating unless you are ready to sign & plonk down some cash as a deposit.

[jasonw]

I've found that dealers these days won't start negotiating unless you are ready to sign & plonk down some cash as a deposit.

Yes that is true, my negotiations started with full price and quickly went down after establishing that if the price is right i would sign the contract that day and put a deposit down.

[snowcherry]

so you're both saying that the actual negotiations won't change under this new system, i can still haggle to get down to where it's agreed on?

[Dazzler]

Hi Snowcherry..

The guys have summarized the term "changeover price" very nicely (thank you)

Here is a good example of the difference a good changeover price can make...

In 2002 I was looking to trade a 1998 Pulsar with nearly 100,000 kms on it for a new 2002 model and was looking at over $10,000 changeover...(giving me about $11,000 for my trade in)

Ended up picking up a 2001 model (identical specs) with lots of extras including nice factory alloys, tinted windows etc and only 6,000kms on the clock for around $6000 changeover, they gave me around $13,000 trade allowance.. I kept the 2001 pulsar for another 4 years and reckon I didn't lose anything extra when trading it on a Getz...

[snowcherry]

thanks for the changeover explanations
frankly i don't think i'd get much for my little festiva, am still deciding if its worth trading in or selling privately, but i'm not sure i could be bothered selling privately. its worth maybe 4.5 tops, less on tradein.
so will have to see


i've noticed hyundai have removed the 'range and price' pricing off the website, the tab is now 'range and options' and some limited pricing under 'hot deals' instead

[Dazzler]

I am still deciding if its worth trading in or selling privately, but i'm not sure i could be bothered selling privately. its worth maybe 4.5 tops, less on tradein.
so will have to see

 

Hi snowcherry, cars worth say $5000 or less seem to sell better privately than later dearer models .. from my understanding it is for several reasons...

Ideal first car..
Less cars available in car yards in that price range (no margin for dealer)
Less money to lose if they buy a lemon,
Not going to get much of a warranty from a dealer in that price bracket...etc...

So it may be worth trying privately (advertised as ideal first car...)

Down here you can advertise in the paper with a photo for something like $75 all up until it sells + another $25 or less to put it on the net for a month or so...

[snowcherry]

cheers Dazz, i think i have to get a RWC etc as well? i have no idea 
i recall when my mum was looking for a cheap auto under $5000 a year or so ago that she had a lot of difficulty. they either were manuals or just not in good enough mechanical condition, so gives a little hope to me that mine could be snatched up quickly.

[Dazzler]

cheers Dazz, i think i have to get a RWC etc as well? i have no idea 

 

Not sure.. Tassie is slack in that area... We only have to get those if we let the Rego lapse (even older cars don't have mandatory inspections)

[Lakes]

in NSW we have to have yearly roadworthy inspections after a car is three years old ( first three years no inspection needed) truck always have yearly inspections.
if you are selling a car you need an inspection to give to the new owner.
they also want to make it tough to keep ten year or older cars on the road.

[snowcherry]

in NSW we have to have yearly roadworthy inspections after a car is three years old ( first three years no inspection needed) truck always have yearly inspections.
if you are selling a car you need an inspection to give to the new owner.
they also want to make it tough to keep ten year or older cars on the road.

yearly inspections? gee that seems tough. does your services cover that requirement automatically?
i'm fairly sure i would need some sort of inspection to sell it...and who knows it may not even pass (i would hope so though, i take care of it), but if i trade it in i don't..... so it comes down to what they may offer i guess compared to how much hassle i have to go through for private sale....and frankly i really can't be bothered doing that much.