NEW VEHICLE RETAIL PRICING
The calculation of retail pricing of new vehicles is quite complicated and actually complex. It begins with the dealers price, that is the amount the manufacturer or importer invoices the dealer for is the starting point. To this the GST is added, followed by the on road costs, on road costs comprise of the State Government Stamp duty, compulsory third party insurance and the actual registration cost. These costs vary between sates, between insurers and the type of registration required, i.e. private, business, country, metropolitan, pensioner concession and differ even between vehicles. And then there are of course dealer charges, often referred to as Pre-delivery charges. As one can see it is quite a number of figures.  And, don't forget that dealer may NOT collude, that is set one simplified price (that is against the competition rule refer ACCC).

Over the years many dealers, in fact most, have actually forgotten what dealer charges cover and how they came about. Dealer charges were first introduced during the Hawke Government reign, at a time when pricing was regulated by the Prices Justification Tribunal (PJT). Dealers made the point and it was accepted by the PJT that a dealer had the right and need to recover from the consumer the cost of unloading the vehicle from the car carrier, inspecting it for transit damage, storing the vehicle pending its sale, registering the vehicle etc. By definition these costs must vary between dealers, as no dealer has the same cost structure as the next. Dealers by law (Fair Trading Department or ACCC may prosecute) may not collude and charge the same price for such service.

On top of the Invoice price for the vehicle a dealer may be charged for co-operative advertising and freight equalisation (so that a vehicle, without on road costs can be sold by all dealer metro and country alike for the same price).

The difference between the Invoice price and the official recommended retail price (RRP) is the dealer margin. That margin varies from make to make, some time even between models. To complicate things, often the manufacturer or importer in addition to that may add “Hold Back” a profit margin, referred to as “Hold-Back”. There are also factory bonuses to consider. Factory bonuses can be paid as wholesale bonuses, i.e. they are paid to the dealer when the car is invoiced, or as retail bonuses - only paid if and when the vehicle is retailed. And then there are volume bonuses that are only paid when certain sales volumes are achieved. Such bonuses may apply only to certain models and/or they only apply to vehicles built in a specific period and may only be paid during certain time frames.

And then there are Fleet subsidies, of different levels varying between models, and special pricing applicable to certain government departments and or instrumentalities and special pricing for various other organisations such as rental companies and fleet management organisations.

For further information contact www.carsolutions.com.au or write to info@carsolutions.com.au
April 2006