Thread: Riddle me this Tombie.

Just look internationally at how the price of the same item varies country to country, depending on ability to pay.

An example is the Big Mac Index. Same product, varying prices.

• Big Mac index worldwide 2018 | Statista

Another really good example is BMW Mseries vehicles

California - 2020 M5 $US110-120K $AUD161 - 176K
Australia 2019 M5 $AUD 250 -270K

Australia has long been the best performing territory for BMW


Regards,
Tote

When studying at Uni a few years back, we did a case study on something very similar - studying demand vs price curve (ie cheaper price - demand goes up and vice versa) and how goods that are deemed luxury defy this and how higher price can increase demand - is illogical. I cannot remember the exact $$ numbers but I do remember the vehicles used.

A Commodore cost about $15K to build (including R&D) and would sell for about $35K and would result in a certain level of demand but if price went up initial demand would drop.

A Porsche 911 Carrera also cost about $15K to build (including R&D noting basic Porsches have been an evolution over many decades) but sold for 10x that at around $150K - for sure demand was no where near the Commodore but if the price of the Porsche went up demand actually increased initially as it was considered to be a luxury good and higher price was considered to be a better product. A bit like $1.70 a litre BP petrol in Double Bay is considered by some to be better petrol than buying at $1.40 a litre in Blacktown .

So markup, demand, sales can depend on a lot of things - eg that Commodore if it was turned into a high end HSV then it behaves like the the Porsche in the market rather than a simple dunnydore.

Originally Posted by DiscoMick

Just look internationally at how the price of the same item varies country to country, depending on ability to pay.

An example is the Big Mac Index. Same product, varying prices.

• Big Mac index worldwide 2018 | Statista

Do you actually pay the $708.00 fee on that site to view the stat's?

Funny that no-one has mentioned 'volume' in this thread. Toyota's markup on its 7x Series is far, far greater than it is on a Yaris. Of course, competition plays a part here as well.

Originally Posted by johntins

Funny that no-one has mentioned 'volume' in this thread. Toyota's markup on its 7x Series is far, far greater than it is on a Yaris. Of course, competition plays a part here as well.

Yes I did. Read my post above re multiplied by expectant sales and also economies of scale. This is why we in Australia pay so much. It cost $X to ship here, so that needs to be added, then because of our total potential market (considering our size of land big and small population) then to make a living dealers (stealers) need a decent mark up as they miss out on volume of sales (or as i said economies of scale) Its that simple. Consider that England (size of Victoria) has a bigger population than all of Australia. So car are cheaper there and the volume of cars is more.

Originally Posted by dirvine

Yes I did. Read my post above re multiplied by expectant sales and also economies of scale. This is why we in Australia pay so much. It cost $X to ship here, so that needs to be added, then because of our total potential market (considering our size of land big and small population) then to make a living dealers (stealers) need a decent mark up as they miss out on volume of sales (or as i said economies of scale) Its that simple. Consider that England (size of Victoria) has a bigger population than all of Australia. So car are cheaper there and the volume of cars is more.

That'll teach me no to skim some posts Sorry, so you did. You also mentioned my next point, which was going to be warranty. Kia builds cars by the bazillion, and thus can offer a 7 year warranty. It isn't that they really believe their cars are that good but that they make sufficient $$$ to have some left over to fix the ones that break, and these days high volume cars, built by robots, all on one or maybe two platforms, don't break that often.

Your point about the size of our market is also worth noting. That's the very reason car manufacturing in this country died, alongside labour costs.

No, of course not. I'm a starving pensioner now, I only read free stuff