It is often said, that cars in New Zealand are expensive. We set out to find whether that is really the case, in absolute terms, and accounting for affordability.
This story was triggered by Citroen's CEO, Vincent Cobée. He stated that his company's cars had become cheaper; the price of a Citroen C3 was now less than it used to be and at the same time the French had become more affluent, meaning that C3 was more affordable both in real terms and in absolute terms.
“The average car in France is 17 months’ worth of minimum salary. For the C3, that has decreased to 9.5 months from 11.5 months in the last five years. Why? Because of the efficiency of production, and it has become more affordable over its life cycle. So, that is the role of the C3 -- we participate in accessible mobility.” stated Vincent Cobée.
This statement prompted a discussion over a few beers about the cost of cars in various markets, including New Zealand, Australia, France, and the UK. We decided to look at the data to prove or disprove the common perception that in New Zealand, we get a raw deal.
We decided we would explore average wages in the four markets and compare vehicle prices of three popular models – Citroen C3, MG 3, and Suzuki Swift – in each of these markets, and then look at how many months it would take in each country to buy these vehicles.
Photo by Jan Kopřiva on Unsplash
Model Availability & Local Pricing
First up we investigated the MRRP of the models in their local currency, Australian dollars, New Zealand dollars, Euro, and Pounds.
Not all models are available in all markets, and what models are available don’t always have the same specifications. We took the entry-level model in each market and included On Road Costs. On-road costs are included in the MRRP of all markets that we looked at, excluding New Zealand, which is telling, so we added $1500 to the MRRP of the NZ models to get a driveaway price.
In the UK, the models we looked at were all manuals, and in Australia and New Zealand, they were usually automatics. We suspect that the volume of manual Swift that is sold here is negligible. Citroen and MG don’t bother to offer manuals here. In France, you can’t buy an MG3 (they only offer electric or PHEV models in mainland Europe), and their entry-level Swift is a hybrid with AEB and adaptive cruise, but it is still a manual.
Citroen has the widest price variances, between markets and most of this has to do with equipment levels. Citroen NZ has decided that a Euro 16,590 manual base model C3 won't fly locally, and so offer a more powerful higher specification, higher output petrol automatic model that in France is around 6,000 Euro more than the entry-level model, meaning the variance between the cheapest C3 and the most expensive is NZD 10,000 across the four markets.
Table 1: Vehicle purchase price in local currency including On Road Costs if applicable.
| Citroen C3 | Suzuki Swift | MG3 |
UK | 13,995 | 17,199 | 13,820 |
Australia | 36,189 | 23,990 | 19,990 |
New Zealand | 31,499 | 22,990 | 21,990 |
France | 16,590 | 15,790 | N/A |
Wages Comparison
To get a better picture of affordability we looked at Medium Monthly wages. Getting the right source of data was critical. Wikipedia is a lazy solution and official websites provided great data, except for France, where we found the raw data hard to source (and we weren’t interested in a Purchasing Power Parity corrected figure, as we couldn’t see the workings), and so we looked at OECD data for all countries.
Table 2: Average wage in local currency. Source OECD
| USD | NZD Annual | NZD Per Month |
UK | 53,985.00 | 87,126.39 | 7,260.53 |
Australia | 59,408.00 | 95,878.57 | 7,989.88 |
New Zealand | 50,772.00 | 81,940.93 | 6,828.41 |
France | 52,764.00 | 85,155.82 | 7,096.32 |
Lastly, courtesy of Mr Vincent Cobée’s comments, we looked at how many months' salary was required to buy each model. We couldn’t use his exact phrase ‘minimum salary’ as that data wasn’t obtainable in a consistent format, so we used median instead.
Median is not always a perfect average to choose, because, in case you need reminding, it is the mid-point. There are other average figures to choose from, but consistency was the key.
Table 3: Model pricing expressed in NZD
| Citroen C3 | Suzuki Swift | MG3 |
UK | 28,638 | 35,194 | 28,280 |
Australia | 38,885 | 25,777 | 21,479 |
New Zealand | 31,499 | 22,990 | 21,990 |
France | 29,125 | 27,721 | N/A |
In simple terms, MG3 is much cheaper in Australia and New Zealand than its competitors in every market. However, it is also much cheaper here than in the UK. This is in part due to higher levels of GST (VAT) in the UK, but also due to aggressive pricing locally. It is worth bearing in mind that the UK vehicle is manual, while the ANZ versions are automatic.
MG3 is consistently the cheapest car in the three markets, versus the C3 and Swift, even though the C3 is on run out in the UK and has aggressive retail pricing running the MG3 close.
Suzuki Swift on the other hand is a bargain in New Zealand compared to the UK and Australia. In France the car is a hybrid, therefore, it attracts a 3000 Euro rebate. This muddies the water somewhat, and so for this exercise, we have ignored rebates. That Swift is so aggressively priced locally, and so close to MG3 is notable (Swift is available locally and in Australia as a manual as the price does reflect this).
Of the three models only, the Swift is available with any form of electrical assistance; MG3 and C3 are pure petrol-powered. France offers a scrappage scheme that is stepped depending on your old car, and how clean your replacement is. It is also capped so the top 25% of income earners can’t access the rebate, thus ensuring that it is targeted at those less able to afford a cleaner replacement. We haven’t factored in scrappage rebates.
The UK is the cheapest of our countries to buy a new C3, but the most expensive place to buy a Swift or a MG3. In Australia, you can drive away a new MG3 for the lowest price (just, and that may depend on which state you live in), and New Zealand is the cheapest market for an entry-level Swift. This is a clear indication that our local vehicles are not over-priced.
Table 4: Affordability, months average wage to buy a car.
| Citroen C3 | Suzuki Swift | MG3 |
UK | 3.94 | 4.85 | 3.90 |
Australia | 4.87 | 3.23 | 2.69 |
New Zealand | 4.61 | 3.37 | 3.22 |
France | 4.10 | 3.91 | _ |
Model Affordability
Our last cross-check is on affordability. We took median salaries and converted them using exchange rates from xe.com at 5.00 pm on 4th December. The consistently cheapest car using relative affluence was the MG3 in all countries, but there are bargains to be had. In the UK C3 and MG3 were very close in price but 3.9 months’ salary. In France it was over 3.9 months’ salary gets you a hybrid automatic (which was the cheapest way to get a clean and efficient car. Perversely the last round of changes in the Clean Car Discount in NZ has left some great models in limbo, and so locally Suzuki NZ has just reduced the price of their local Swift Hybrid Auto to give it the same affordability, albeit while stocks last).
However, France also has a scrappage scheme that makes newer cleaner cars more affordable right now (just as our clean car rebate makes some local models more affordable).
Australia and New Zealand have quite a widespread in affordability and this is driven by our preference for automatics, rather than manuals. Citroen is hamstrung by not having an automatic on an entry-level car.
The summary? There is no evidence to point to our cars being expensive, however there is plenty of evidence to show that our cars are well priced. One could argue that raising our average wages would also help, as we were the lowest of the four counties examined.
What is clear that government incentives or rebates do shift both affordability and consumer demand. When this article was first drafted at the start of the year NZ Swift achieved the largest rebate of any of the three cars. Now that rebate has gone, but the car you buy today has a life of 10-15 years. Any substantial difference in fuel economy or emissions will be present for a long time after that car has been bought.
Perhaps we should be steering consumers to cleaner more efficient cars after all.
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Sources:
Suzuki Swift | Iconic Hatchback | Suzuki Australia Suzuki Swift - Cute, Lovable, Reliable - Brand New From $22,990+ORC Swift Hybrid | Versatile & stylish city car | Suzuki
Suzuki Swift Hybrid 2023 | Suzuki Cars UK Citroën C3 | The customisable and connected small car (citroen.co.nz) Build & Reserve Vehicle | CITROËN (citroen.com.au) Citroën C3 | Customizable Diesel/ Petrol city car (citroen.fr) Citroën C3 | Compact Hatchback | Citroën UK (citroen.co.uk) New MG MG3 Auto for sale | New Zealand, Napier, Tauranga, Palmerston North, Christchurch, Hamilton, Southland, Pukekohe, Wairau Valley, Nelson, Wellington, Whangarei, Dunedin, Hawera, New Plymouth, Auckland, Rotorua, Lower Hutt | MG Motor New Zealand New MG MG3 Auto for sale | Bridgewater | Adelaide Hills MG (ahmgmotors.com.au) MG3 | Best Value Hatchback | MG MOTOR UK Earnings and wages - Average wages - OECD Data