Increased overseas competition within the national car market and the strength of the Australian dollar are major factors driving the increasing affordability of cars, as revealed in a recent study by CommSec. Add onto that the steady trend of increasing wages for the Australian worker, now is a great time to be in the market for a new car.
Typical family cars have become more affordable
This can be demonstrated by taking a typical Australian car such as the Ford Falcon base model sedan. Yes, the technology of the Ford Falcon has evolved over time, but the base model has always been a six-cylinder family car. The graph below shows the relationship between wages and the price of a Ford Falcon, and illustrates the relative affordability of a typical family car in Australia.
Since the release of the Ford Falcon in Australia in 1960, the base model sedan has become more affordable. In 1960 it took a man earning the average "male" wage 60 weeks to afford a Ford Falcon. In 1971 it took a man almost half that time to afford the same base model sedan - he would only have to work 32 weeks being paid the average wage of the time. In the nineties, Ford Falcons became less affordable once again. Luckily for consumers, a trend of decreasing prices since 2002 has continued, and now Ford Falcons are being sold at their most affordable price ever: today in 2012, the Ford Falcon costs 30 weeks average pay.
It's the same story for luxury cars
Luxury cars are now more affordable and ownership of a Porsche or Ferrari has become a more realistic aspiration for a working Australian. In 2002, a Porsche Boxter Roadster went for two and a half years worth of wages; today, that same car can be bought for just 83 weeks' wages (just over a year and a half). The fall in prices for luxury cars in Australia is in part due to huge reduction in tariffs on imported cars, from 57.5% in 1980s to 5% today. Lower tariffs have not only increased the variety of cars on offer and made foreign car brands more affordable but also driven down local car prices as they compete for sales in a more diverse market.
If you are taking advantage of the most affordable car prices in 30 years, make sure you insure your new vehicle. Allianz Car Insurance offers comprehensive insurance for your vehicle and will make sure that your new investment is protected in the event of a road accident or theft.