Wage-To-Honda City Ratio – In Which Country Is It Most Affordable To Buy A Car?Insights
Did you know that an average Australian just needs to pay an equivalent of just slightly over three months of his salary to buy a Honda City? In comparison, an average Vietnamese needs to work for 158 months to afford the same car.
The average Malaysian sits somewhere in the middle, requiring about 25 months of his salary to pay off his Honda City. But does this tell the whole story?
To find out citizens of which country have it the easiest when it comes to buying a car, we made a simple comparison by cross-referencing published data on the average monthly wages of key countries in the Asia-Ocenia region against a common entry-level car that is available in each country.
Of course, with a diverse range of countries in our list, the word ‘entry-level’ carries a different meaning in different countries. A Honda Brio is an entry-level car for people in Thailand and Indonesia but the model isn’t sold in Malaysia, so it can’t be used as a common denominator for our comparison.
The other option was to use a Toyota Vios, but the model isn’t sold in Australia. So the next alternative was to use a Honda City, a common car that is sold across all the countries listed here, with more or less the same specifications.
We also recognised that the entry-variant for the City In many developing markets is a very low priced manual transmission model but this variant is not available in Malaysia or even Singapore. So keep the comparison as consistent as possible, we only took prices of the cheapest automatic transmission (CVT) variant of the Honda City sold in the respective countries.
The data on monthly wages are taken from the United Nations International Labour Organisation – the primary source data for many socio-economic research.
But is this enough to tell a full story? Not quite, a country might have a high average income but that might not mean much to the average guy on the street. This is where the Gini coefficient comes in – a measure of how well income is distributed across the population of a given country.
A Gini coefficient of 1 indicates a perfectly equal country, where nobody lives in poverty and nobody is outlandishly rich. The opposite of that is a Gini coefficient of 100, essentially a failed state, where wealth is only concentrated among a small group of elites while everyone else lives in poverty.
Sweden has a Gini coefficient of 23.0 while the figure for Botswana is 63.0.
Back to the results, China was a surprise. With an average income of USD613 (RM2,689, depending how much our RM has dropped), it is not too far from Malaysia’s circa RM2,900. In other words, labour in China is no longer as cheap as what many people still think it is.
Since 2011, the Chinese government has been working to raise the country’s minimum wage by at least 13 percent per annum, and it aims to continue doing so for the next five years.
An average Chinese worker can also pay off his Honda City about two months earlier than his Malaysian counterpart, who needs to fork out about 25 months of his salary to own a Honda City 1.5S.
What is more worrying is the figures on the last column. Malaysia’s Gini coefficient is the second highest among all the countries listed here.
So while the statistics show that the average monthly wage in Malaysia is about RM2,900, the reality is that there is a large percentage of Malaysians who earn a lot less than that.
We also need to point that this comparison is only limited to the cost of purchasing a new car and does not reflect the actual cost of owning a car. In many developed countries like Singapore and Australia, cars might be relatively cheaper to buy, but driving in these countries can be a lot more expensive than in Malaysia, not to mention the higher labour charges for maintenance work.
In central Melbourne for example, you can expect to pay between AUD35 to AUD40 for just a two-hour parking, and kerbside parking in limited to a short period only, usually about 30 minutes or less, and is very limited.
The idea is not to discourage people from buying cars, but to discourage them from driving into the city centre, where public transport is easily available.
Over in Singapore, the system makes it very difficult for one to keep a car beyond 10 years. So nevermind about resale value, the car going to be scrapped anyway. Yes, you can renew the Certificate of Ownership (COE) for another five or ten years, but it’s going to be cost a lot, sometimes more than the market value of the car.
There’s also other things like toll charges, depends on toll roads which vary from not just from one country to another but also from city to city.
Insurance cost might also differ, but not by much. Australia follows a driver’s risk profile-based model when quoting insurance premiums for drivers, so no two drivers pay exactly the same amount for insurance.
A low-risk driver in his 30s, driving a nondescript silver colour Honda City that is mostly used to drive to his work place and back, parked outside of his house at a relatively safe suburban neighbourhood in Victoria will only need to pay about AUD730 per year for his motor insurance. Sounds pretty affordable. Conversely, a 25-year old driving a Subaru WRX can expect to pay a lot more.