Car Price Disparity – Like The Heavens & Earth

We at Malaysia-based Automology, where imported cars are taxed ‘sky-high’, decided to conduct as empirical a study as possible from the comfort of our office chairs on the disparate prices of cars across the world. Admittedly, this came about as we are miffed that the Malaysian government continues to insist that high import taxes are necessary to protect the local auto manufacturing industry, which decades after it began appears to continue to require mollycoddling.

The comparison encompasses some of the largest car markets in the world…and Malaysia, of course, and includes some of the best-selling (high volume) and popular (highly coveted, hardly affordable) vehicles in the world.

The local prices are extracted directly from the manufacturers’ official websites in the different countries. Where possible, we compare apple to apple, when the same variant of the model is available. However, availability and variants do differ somewhat from country to country; in such cases, we pick the closes variant possible, so we are still comparing a red apple to a green apple. When even green apples or official manufacturer’s price are not available, we have indicated ‘NA’. See, we are trying to be as ‘scientific’ as possible.

Here is what we managed to glean after much research (click image for larger view):

This is by no means a price guide to buying cars, but it does nicely for our price comparison study.

Next, to ease the comparison, we converted the prices to US Dollars based on today’s foreign exchange rates. Here is what we got (click image for larger view):

Ah hah! Now, we begin to see the disparity clearly. The price of a Chevrolet Cruze in Malaysia is almost the same as a BMW 3 320i in the USA (you can imagine the expletives that are being thrown around in our office now)! The same Cruze is double the price in Malaysia compared to South Korea and China.

For the price of a Honda Civic in Malaysia, you can purchase a Mercedes C200 Sedan in the States (more expletives uttered here). The Prius costs more than double here compared to the European markets; as much as we would love to preserve the environment, it would certainly destroy our bank account balances.

How about the highly coveted Porsche 911 Carrera? In all the countries that are in this study, it is most expensive in Malaysia, costing US$254,200 compared to only US$84,300 in the US. In fact, add another US$7,200 to the price of the Prius in Malaysia, and you can get yourself a Carrera in the States.

As if we did not feel depressed enough, we decided to compare the prices of cars to the disposable income in each of these countries (after all, as tax payers, we only have so much left to spend). Here are the prices of cars in percentage compared to the average yearly disposable income:

(Note: disposable income averages are based on 2012 OECD statistics except for those marked * which are based on 2009 ILO wage statistics, and then calculated until an estimate for 2012 is achieved using the average pay rise – Malaysia 6%, India 10%, China 12.5% – minus taxes).

As the numbers clearly show, the cost of most cars in the European countries is equivalent to less than a year of two of the average income earner’s disposable income. In Malaysia, however, it takes three to seven years of income to cover the cost of the vehicle, not yet taking into consideration other living expenses.

Of course we can also look at China and India which have as high, if not higher, price percentages as Malaysia. However, a more equitable comparison should be with South Korea, which has a population of about 50 million, while Malaysia has about 30 million. In the 1970’s, Malaysia’s GNI was way ahead of South Korea (US$380 vs US$260). By 2009, the latter had far surpassed and tripled its GNI compared to Malaysia (US$6,760 vs US$21,530). In the table above, you can see that the disposable income of South Koreans is on par with the Germans and British, while Malaysia lags behind by more than half.

Despite the weak buying power of Malaysians, we still have to pay ridiculously high prices for cars. According to the Malaysian Prime Minister Department, as reported by Bernama, 27% of Malaysians who declared bankruptcy between 2007 to 2013 were due to hire purchase of vehicles (however, this also raises the question of ‘why buy if you cannot afford to?’). Really, with these numbers in our faces, we have lost our appetites to buy new cars.

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