Thread: Why are parts so overpriced in Australia?

If the high prices are because of additional costs due to the factors explained in previous posts, why are Old Man Emu shock absorbers, which are apparently made in Australia by an Australian company, more expensive in Australia than in the US?

OME N78 (Seies LR front) local price AU$159 each - actually I think they may be more than this, but that's what I paid.

OME N78, "Rovers North" US$129.99 (AU$125.99)

So an Australian product is 20% cheaper in the US than in Australia. This cannot have anything to do with warehousing, labour costs etc., as both products came from the same parts bin IN AUSTRALIA. Nor can it have anything to do with total number of sales, because (again) they all came from the same place here in Australia. If anything the US price should be higher because of the shipping costs.

Originally Posted by JDNSW

The point you are missing is, yes, the importer will bring in more than six U-bolts - and most of them will spend years sitting on the shelf! .

John

You know someone who still keeps slow moving items in stock? They probably ordered the quantity by mistake.

The local engineering suppliers will show you pictures and tell you they will get the item in for you.Some even try to charge the freight to you. I had to get a repair kit for a piece of hydraulic workshop equipment. Predictably the local agent (state distributor) did not have any. "Get it from Melbourne overnight". This is a glassine packet containing a bucket seal, three o-rings, and a couple of fibre and copper washers. Cost $14 plus $15 freight. "No way" says I. "Keep the bloody thing unless you wear the freight charge. You should have this in stock." Went home, pulled it apart, took a stuffed bucket seal to the local hydraulic guy as a horrible example, got one for 70 cents, and the rest from my shelf. Should have done this in the first place.

I don't necesarily buy into all this "it could sit on the shelf for years" "black hole in the vendors pocket" crap. In most circumstances, a good business should be able to forecast what supplies they should use in a given period and stock that amount and restock when levels get below a certain percentage. If they can't, then maybe they shouldn't be in business. Sometimes getting something freighted from the UK is quicker and just as expensive as getting it from another Australian city anyway.

Getting it directly from "Bearmach" for example may not be an option due to supplier agreements blah blah blah. but... during my last P38 service with my LR mechanic, they told me my EAS pump had zero output. Along with a small handfull of other issues, my parts price list was sitting at above $1300 ex GST (including $660 ex GST ex freight for a new compressor)

So I did some research and ran across a company in the UK... My parts price list was all of a sudden $400!! (270 pounds) which included the 70 pounds postage and was at my door within a week...
The EAS compressor cost me 148 pounds for a new one, for those who want to know. a long track rod... $150AUD turned into 19pounds ($29...) and the list goes on. Whilst they are not "genuine", and I do understand you always pay more for "genuine", they are from Bearmach, so close enough for me.
This guy is just a really nice... pom!
PM me if you want his details...

PS.
I still got my local LR mechanic to do some of the work because they are really nice guys, very professional and they were totally cool with me supplying my own parts.

I too usually purchase my parts from overseas, it is usually quicker and cheaper, however I also understand why the prices are high in Australia.

The manufacturing cost may be the same but the overheads are hugely different here compared to the UK and USA.

If we live in a country where we expect and get higher wages than our counterparts overseas therefore we have to expect products to cost more.

Those higher salaries have to come from somewhere and when you also factor in higher insurances costs, rent, taxes, electricity etc etc it all starts to add up.

It would be fine for an Australian company to sell the same product for the prices in the UK and USA, but then all the conditions would need to be on par and they are not.

Not too mention that if a supplier starting selling at those low prices and informed their staff that they all need to take a pay cut for the business to be viable to match salaries in other countries...

There was an article last year in one of the Harley Davidson magazines about this very topic, they did a direct comparison of business expenses between the USA and AUS and found that all major overheads where 2 to 3 times greater in Australia not to mention reduced market and transport logistics.

Originally Posted by Warb

If the high prices are because of additional costs due to the factors explained in previous posts, why are Old Man Emu shock absorbers, which are apparently made in Australia by an Australian company, more expensive in Australia than in the US?

OME N78 (Seies LR front) local price AU$159 each - actually I think they may be more than this, but that's what I paid.

OME N78, "Rovers North" US$129.99 (AU$125.99)

So an Australian product is 20% cheaper in the US than in Australia. This cannot have anything to do with warehousing, labour costs etc., as both products came from the same parts bin IN AUSTRALIA. Nor can it have anything to do with total number of sales, because (again) they all came from the same place here in Australia. If anything the US price should be higher because of the shipping costs.

Penfolds Bin 128 red is on special today at Dan Murphy's for $28.90 per bottle if you buy 6, $30.90 singly. I saw this in Ralph's supermarkets in the USA under $9. Real Carlsberg from Denmark is under $9 per six pack there, not the badge engineered VB slop sold here, which my local bottle shop has at $17.99. Long necks of Heineken which we do not see here are sold all across the USA for $2.20 to $2.40 each.

Originally Posted by Brian Hjelm

Penfolds Bin 128 red is on special today at Dan Murphy's for $28.90 per bottle if you buy 6, $30.90 singly. I saw this in Ralph's supermarkets in the USA under $9. Real Carlsberg from Denmark is under $9 per six pack there, not the badge engineered VB slop sold here, which my local bottle shop has at $17.99. Long necks of Heineken which we do not see here are sold all across the USA for $2.20 to $2.40 each.

I think you will find a substantial amount of that price differential is tax.

Stella Beer is made here under licence, yet they charge the same money, as Grolsch thats imported.....

While I have no axe to grind and have little sympathy for Australian companies that sell for export cheaper than in OZ, there is a "good" reason why they do.
Austrade and the Australian government urge Australian companies to export at Marginal Cost Pricing.
This means that all the overhead costs of the business are paid for within the domestic price and that the pricing for exports is only the cost of materials and labour accruing from the extra production.

Also , if the export volume makes the plant more efficient by for example reducing unit cost of components or increasing plant utilization, then this may be reflected in a lower domestic price also.
This is a well known economic principle that recognises the transient nature of exports which are subject to the vagaries of currency .

If the manufacturer priced the decreased costs from the extra export volume into domestic prices then a loss of the exports could prove fatal to the company, if they could not very quickly increase prices.

Also export prices have to recognise the competion in the export market. The USA has many competitive manufacturers to ARB, eg Detroit etc and ARB have to align prices to them to some extent at least.
So maybe now you understand the economic theory reason .
Regards Philip A