Why are cars in the U.S so cheap?

[GT Pro]

I have asked this question before but there were only a handful of knowledgeable members present in the thread and I know that I'll find many more within this specific area of the forums. But without further ado, this is my question to you:
Why are vehicles in the U.S priced so incredibly low?

This question has got me stumped (the only thing I can think of would pertain to taxes) and the fact that other large areas of the planet (e.g., Europe, Australia, Canada) pay so much more has me rather annoyed somewhat.

A price comparison on the following vehicles shows a huge difference between what U.S residents pay as opposed to their UK and AUS. friends:

Price at new:

Vehicle:
2008 Merc. S63 AMG

U.S - $127,775 USD
UK - $193.757 USD
Aust. - $306,108.13 USD

Vehicle:
2008 Nissan Z Coupe (base model)

U.S- $27,980 USD
U.K- $54,335 USD
Aust. - $55,126.34 USD

Vehicle:
2008 Lamborghini Gallardo

U.S - $180,050 USD
UK - $304,295.08 USD
Aust. - $371,805. USD

Vehicle:
2008 Rolls-Royce Phantom

U.S - $333,350 USD
UK - $539,374 USD
Aust. - $800,433 USD

Vehicle:
2008 BMW 550i Sedan

U.S -$58,500 USD
UK - $93,039.61 USD
Aust.- $143,409.52 USD



So please tell me GTPlanet, does the difference in cost largely concern taxes? Or are there other forces in play too?

 

[Famine]

Why are vehicles in the U.S priced so incredibly low?

The war in Iraq.

[/Conspiracy Theories]

Incidentally, I'm wondering where you're getting your numbers from. For instance:

2008 Lamborghini Gallardo

U.S - $180,050 USD
UK - 304,295.08 USD
Aust. - 371,805. USD

The UK list prices for the Gallardo start at USD249,167. The most expensive model, the Superleggera, is near USD305,000

 

[GT Pro]

The UK list prices for the Gallardo start at USD249,167. The most expensive model, the Superleggera, is near USD305,000

My bad. I just realised for that particular model that I converted the price of a 2008 used Gallardo (since I could not find any new prices on their website), which included the usual after-sale on-road costs at roughly $149,000 UK. From this site, the price for the base Gallardo given works out to be 258,000 USD. So I guess there is some variance, but I am unsure as to where I can obtain a definitive up-to-date list of car prices across the world. Where would you suggest to get the figures from?

 

[livemusic]

It's even more expensive over here. The BMW 550i Sedan for instance, costs U$190k. Probably the taxes, yeah.

 

[Alfaholic]

I didn't think all vehicles were cheaper in the USA, only USA manufactured vehicles. I'd suspect they are cheaper because of the huge volumes they are produced in. The USA is one of the biggest car markets on the planet, if not the biggest.

The US manufacturers also seem to save a lot of money by not employing any stylists.... *ducks and runs*

Just kidding please don't shoot me.

 

[McLaren]

I'm not exactly sure, but I thought they were expensive in Aus. due to taxes.

 

[GilesGuthrie]

There are stringent import taxes in Australia for vehicles over a specific value. Similarly in the UK, we have significant taxation issues, with 10% "new car tax" and 17.5% "value-added tax". We also (especially for Japanese cars) place import quotas on bodyshells, so manufacturers increase costs as their volumes are held artificially low.

Also, the US$ is exceptionally weak at the minute, which inflates any comparisons.

Finally, I do think that there are volume sales issues that allow carmakers to adjust costs on a country-by-country basis, and the US will always do well in this.

 

[Philly]

It's even more expensive over here. The BMW 550i Sedan for instance, costs U$190k. Probably the taxes, yeah.

Does anybody ever buy a new car?

Also, the US$ is exceptionally weak at the minute, which inflates any comparisons.

It hasn't always been. Cars generally are cheaper right now, but the weakness of the dollar probably does blow it a little out of proportion.

I would guess that cars are cheap here because everything else is cheap. There is a lot more land, so the cost of living is much cheaper here than the UK.

 

[YSSMAN]

Its most of the stuff that has already been mentioned...

- Strength/Weakness of the American dollar
- Low cost of import
- Low taxes on new car sales
- Big market means its cheaper to give us more
- A lot of them are built here these days (American, Japanese, German and Korean cars)

Its part of what we get for dominating and rebuilding so much of the industry after World War II...

 

[livemusic]

Does anybody ever buy a new car?

I was astonished the other day when Venari (I think it was him) showed the used Volvo he bought for around £500 if I'm not mistaken. That would cost at least U$10.000 over here.

 

[Philly]

Its part of what we get for dominating and rebuilding so much of the industry after World War II...

The British were going pretty solid for a while too. And the Germans became pretty big not too much later.

I was astonished the other day when Venari (I think it was him) showed the used Volvo he bought for around £500 if I'm not mistaken. That would cost at least U$10.000 over here.

$10,000 for an old Volvo? You would you be better off buying the car in the US and shipping it down there?

 

[Duke]

Also, the US$ is exceptionally weak at the minute, which inflates any comparisons.

With all due respect, the weak dollar would mean that cars should be relatively MORE expensive (for, at least, cars imported into the US) than their European counterparts.

 

[Pupik]

Its most of the stuff that has already been mentioned...

- Low cost of import
- Low taxes on new car sales
- Big market means its cheaper to give us more
- A lot of them are built here these days (American, Japanese, German and Korean cars)

It's a very competitive market in the US, with lots of volume potential, so manufacturers have to sell as cheaply as possible. Not to mention, there's lots of competition between dealers of the same brand.

For example, in Florida there's only a sales tax (it's 6%, same as any other durable good) and a few small state fees (called "environmental fees") thrown in to boot: $1 for each tire, $2 for the battery. There's also the gas-guzzler taxes, but they only affect cars with really poor fuel economy; these are usually exotic cars, so what's another $5000-7000?

Any other excises and import taxes are levied "behind the scenes" and are directly worked into the Manufacturer's (Suggested) Retail Price. Most other taxes occur during registration of a car through the state of the owner's residence ($30-100).

 

[Barracuda]

It's a very competitive market in the US, with lots of volume potential, so manufacturers have to sell as cheaply as possible. Not to mention, there's lots of competition between dealers of the same brand.

For example, in Florida there's only a sales tax (it's 6%, same as any other durable good) and a few small state fees (called "environmental fees") thrown in to boot: $1 for each tire, $2 for the battery. There's also the gas-guzzler taxes, but they only affect cars with really poor fuel economy; these are usually exotic cars, so what's another $5000-7000?

Any other excises and import taxes are levied "behind the scenes" and are directly worked into the Manufacturer's (Suggested) Retail Price. Most other taxes occur during registration of a car through the state of the owner's residence ($30-100).

It's actually 7% sales tax

It depends on what part of the country your in and the laws in that state. Florida, like you said, has sales tax but close to no other taxes and laws on cars. When I used to live in New Hampshire there was no sales tax, but inspection and other taxes up the wazoo.

 

[Casio]

There are stringent import taxes in Australia for vehicles over a specific value.

Bingo. In Australia the 'Luxury Car Tax' kicks in at $57,123 for imported cars. The tax rate is 25% on every dollar over $57,123. Then when you get into big dollar cars, even the 2-5% stamp duty can be $20,000 - $40,000 depending on the vehicle. Put another 10% GST on, etc, etc, etc....

 

[SolidSnake15]

dealers want us to afford the cars...with all the taxes and bills our super rich government(sarcasm) throws at us.

 

[YSSMAN]

Go to your local Chrysler dealer and they're likely giving them away. There were '07 Sebrings and Town and Country models on the lot for less than $15,000 with the full warranty and no miles on the clock...

...Keep in mind this is Domestic-friendly Michigan, a very rare occurance...

 

[Giancarlo]

With all due respect, the weak dollar would mean that cars should be relatively MORE expensive (for, at least, cars imported into the US) than their European counterparts.

Yeah i was just gonna say, according to the numbers he's posted, the USD is stronger than Australia's. And in fact, at the moment, it is, with about $1.14 AUS needed to buy $1 US.

That's gonna add up when you're talking thousands of dollars, along with taxes, so that's your explanation. I don't think that makes the cars necessarily "cheaper," though. Except for taxes. I guess we do pay fewer taxes.

 

[GT Pro]

Thanks for all the answers guys.

It seems so far then that the primary reason for the cheap price of cars in the U.S is due to lower importation costs, a bigger market and the fact that many of the vehicles are built locally. Secondly, and probably most importantly, is the huge luxury car tax that kicks in after you pass the $57,126 mark.

But what I have noticed recently is that, compared to the U.S and UK, it is incredibly cheap to insure a car here in Australia. Can anyone shed some light as to why this is and possibly make some rough comparisons?

Again, thanks for the help so far. 👍

 

[YSSMAN]

It depends, I think. I'd guess that a lot of it has to do with the other reasons listed before; More cars and more people make it cheaper to insure the vehicles by days end. This being said, it seems like they're far more apt to screwing customers over with insurance rates in non-North American countries; They're almost reasonable here by comparison.

Still, when I'm paying over $100 a month to insure my Jetta, I don't think I can really call it reasonable at all...

 

[Casio]

It's not actually that cheap to insure here. I just did a quote for my car, and full comp if I had it would cost me 175$ a month, and that's a POS little purple 4-Cyl in a good area.

I'm not sure how excess works in other countries, but my 3rd party is 50$ a month or something, but my excess is like $900.