The Truth About European Car Prices; Discounts Up To 42%

Paul Niedermeyer
by Paul Niedermeyer
the truth about european car prices discounts up to 42

Update: It’s obvious I’m confusing as many or more folks with this post as I am enlightening some. As an addicted Economist reader, I enjoy unraveling the myths and stereotypes that Europeans pay $30k for a basic Ford Focus or pay $9 for a gallon of gas. We do, if we go there with our dollars. They don’t. The information below is intended as a set of tools to better understand the issues, but will not explain them all perfectly. I’ve run out of time to respond to comments, so I hope this helps. Or pick up an Economist :)

European new car prices can be as confusing to us Yanks as ordering from a menu in Latvia. We’re always hearing about tiny $29k econoboxes and the like. List prices are typically converted to US dollars, and the results can be very this link here; it will take you to a (slow) slide show from Auto, Motor und Sport that shows a large spectrum of cars like the Audi above. It’s in German, but you’ll be able to figure out the two prices at the bottom of each screen and the percent discount.

VAT tax is included (by law) in all advertised prices. That means for our purposes, and to get a feel for the prices manufacturers are getting, reduce all prices by 15.966%.

Currency conversion: The dollar has swung by huge amounts in the last ten years versus the euro. But unless you personally are buying with dollars, its largely irrelevant to this exercise. Europeans are paid in Euros, and buy in Euros, and the general rule of thumb is to use a purchasing power parity ratio of 1 euro to 1 dollar (as per the Economist). So if you want to know what a car actually costs European buyers, don’t convert it to dollars. And as the European manufacturers exporting to the US have long known, the currency fluctuations can not drive their pricing; the market does.

They either hedge, make less profit until the dollar comes back up, or have US plants that ship some of their cars back to Europe, like BMW and Mercedes do, to offset the imports. Any way you look at European prices, converting their MSRPs to dollars will get you…confused. Yet it’s done all the time.

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  • European European on Jan 21, 2010

    im sorry to say this, heck i even logged on to post a comment, but this article is just a POS. what logic is that, that europeans dont pay more? and equaling 1 $= 1euro. wtf? take this path of logic: a carcompany, vw for example, is making money on a carmodel for $11k in the us. lets say they got 10% profit incorporated in that price. that makes the total production cost of a single car of $10k. they sell the same car in europe as well. why dont they sell it for $10k = 7-8k euros, but 11k euros as well. hmmm???? how about that??? so the profit the carcompany makes in absolute (dollars or euros) is far off. no matter if americans and europeans work the same amount of time for the same car. vw could and should be selling that car for less in europe. EUROPEANS DO PAY MORE! 30% more. some europeans pay even more then their neighbouring countries. look at und prices differ 20-30% !!!! and btw, that citroen xsara u used as an example, well i bet many readers dont know, but thats an old old freaking OLD model, mid-late 90s, now sold as an used-car. sure the rebate would be 42% or something, its so hideous i wouldnt take one for free.

  • European European on Jan 21, 2010

    see, im so pissed at ttac's journalistic skills that im doing a repost: so ive done some research, and got the following result Mercedes CL550 cost in the US $110,400 ( Mercedes CL550 costs in Germany from EUR114,755 ~ $161,963.19 Mercedes CL550 costs in Austria from EUR140,990 ~ $198,590.38 same car, assembled in Sindelfingen, Germany (wikipedia), same production cost. yet price-difference is HUGE!!! so ok, you say, germany/austria have VAT. sure, lets say its 20% (20 for austria, 19 for germany to be exact) on top of the base-price, and lets take the US selling price as the vehicle-base-price. $110,000 + 20% = $132,000, which means the german buyer pays at least $30,000 MORE ($162,000-$132,000) than the US customer does (VAT or noVAT). HOW IS THAT FREAKING EQUAL???? ...wont even go into the fact that austrian suckers have to pay almost the double :( as Ingvar in his comment said ( "It’s not a European markup. It’s an American markdown. In effect, the rest of the world subsidizes lower prices in the US with higher prices just about everywhere else." you want to know the real truth why GM/Chrysler/FORD fooked up? no, its not coz of the crappy plastic dashes, bad reliability or unionworkers. NO! its coz they've been selling their cars primerely in the US market, and they had to sell them cheap, because fatazz americans want the biggest, baddest, mofo car - for pennies. but they had no other markets they could really "milk" to offset the losses they made in the US market. lets see: presence of Chrysler in Europe (all three brands chrysler/dodge/jeep) neglectable. presence of GM in Europe (cadillac, saab, opel), while cadillac/saab are neglectable, only opel was doing some volumes. guess its now clear why GM didnt let go of opel huh? and yes ford. ford had volvo/landrover/fordeurope. only fordeurope is doing ok, consequently they didnt go belly up. huh? now things are getting clearer. Shoutout to all the manufacturers: PLEASE GROW SOME BALLS, AND DONT LET EUROPEAN OR OTHER CONSUMERS SUBSIDISE THE FAT AMERICANS. SHOW THEM FATTIES THE MIDDLE FINGER AND CHARGE THEM ACCORDINGLY.

  • Svenmeier Speedometer display in the center console screen? Why? This is a dealbreaker for me.
  • Alan I do believe that traffic infringements penalties based on income will affect those who are financial able to flout safety regulations.When I drive above the posted speed limit I assess my situation using probability. If I'm confronted with a situation where time is of more value to me than speed I will speed if I assess the probability of a fine to be quite low. I can afford the fine, what I can't afford is the loss of points on my drivers licence.In Australia (12 points in QLD and all States have a point system) we have a points system attached to your drivers licence. An open drivers licence is granted 12 points every 3 years. So, if you receive an infringement for exceeding the speed limit it takes 3 years for the points to be removed. I generally get caught once every 2 years.I think a points system would be a fairer system over a system based on income. Its about retaining your licence and safety, not financial gain by the government.As you can see below it wouldn't take long for many US drivers to lose their drivers licence.[h2]Current penalties for individuals caught speeding[/h2]InfringementPenalty amountDemerit pointsLess than 11km/h over the speed limit$287. 1 pointAt least 11km/h but not more than 20km/h over the speed limit$431. 3 pointsMore than 20km/h but not more than 30km/h over the speed limit$646. 4 pointsMore than 30km/h but not more than 40km/h over the speed limit$1,078. 6 pointsMore than 40km/h over the speed limit$1,653. 8 points and 6 month suspension
  • Wjtinfwb Instead of raising fines, why don't the authorities enforce the laws and write tickets, and have judges enforce the penalty or sentence of a crime. I live across the street from an Elementary School on a 4-lane divided state highway. every morning the cop sits in his car and when someone sails through the School Zone well above the 10 mph limit, he merely hits his siren to get their attention but that's it. I've never, in 5 years, seen them get out of the car and actually stop and driver and confront them about speeding. As a result, no one pays attention and when the School Zone light is not lit, traffic flies by at 50-60 mph in the 45 zone. Almost no enforcement occurs until the inevitable crash, last year some zoned out girl rolled her beater Elantra 3 times. On a dry, straight, 4 lane road with a 45 mph limit. I'm no Angel and have a heavy foot myself. I've received my share of speeding tickets, lots of them when younger. Traffic enforcement in most locales has become a joke these days, jacking prices because someone has a higher income in as asinine as our stupid tax policy and non-existent immigration enforcement.
  • Jeff S If AM went away I would listen to FM but since it is insignificant in the cost to the car and in an emergency broadcast it is good to have. I agree with some of the others its another way to collect money with a subscription. AM is most likely to go away in the future but I will use AM as long as its around.
  • BEPLA I think it's cool the way it is.If I had the money, time and space - I'd buy it, clean it up, and just do enough to get it running properly.Then take it to Cars and Coffee and park it next to all the newer Mustangs.