Motoring

Is Australia really the cheapest country to own a car?

cheapest cars

Bruce Newton

Posted October 05, 2021

Read this before trusting the next ‘expert’ survey that comes your way.

Considering how much new and used car prices are rising at the moment you might be surprised to find out a recent UK study has found Australia is the most affordable country to own a car.

It’s a comforting headline, but is it true? Really, it depends on how you choose to construct your research.

For example, one survey by UK website scrapcarcomparison.co.uk based its findings on a comparison of 40 countries where cost data was readily available for earnings, car price, insurance, repair and fuel. The results ultimately revealed the percentage of each country’s average yearly salary (per person) required to purchase and run a new car.

Australians, the survey found, were required to spend just under half the average yearly salary (49.48%) to own and run a car, with the USA in second place.

The other side

So, is Australia really a car-buying Nirvana? The Australian Automobile Association, of which the RACV is a member, publishes a quarterly report - the Transport Affordability Index - that indicates there might be trouble in paradise. 

The reports latest findings for the second quarter of 2021 reveal that average Australian household spending on transport costs are at their highest level since research first began five years ago, rising to almost $361 per week.

Average transport costs per week

The Average Australian spends $360.63 per week on their vehicle.

Fuel prices were the primary cause of a $6 increase from the previous quarter. Findings from the first quarter had also risen sharply, adding car loan repayment hikes and, in some cases, registration costs, to the price spiral.

The report also factors in public transport costs per week, but it is a relatively small percentage of the total. 

The data has also revealed the disparity of the results depending on where you live. In Australia’s largest city, Sydney, the weekly average was $469.74, while Wagga Wagga in the state’s south-west, was a much more affordable $303.77.

A tale of two surveys

Ross Booth, the global General Manager of car pricing and retailing expert Redbook.com.au says the UK survey is a bit simplistic but has some “credence”.

“Fundamentally, Australia is going to perform well because our average wage is high and our fuel costs are low globally, insurance costs are probably reasonable in the world.”

However, Booth has concerns as the UK survey doesn’t consider important car-owner costs such as vehicle depreciation and warranty.

“Vehicle depreciation is one of the key things when you talk about when it comes to cost. I don’t think they have dealt with depreciation at all.”

Booth also makes the point the price of vehicles in Australia varies enormously compared to other markets. While the prices of a VW Golf and Toyota Corolla are relatively even around the globe, Australians pay a lot more than customers in countries like the USA for higher-end vehicles.

“The higher you go up in a range, or the more specialised the vehicles become, the more Australians get ripped off,” he said.

“You can’t tell me that a Porsche in Australia is better than one in the USA, no way, but we are paying twice as much [because exchange rates and local taxes hit luxury models harder in Australia].”

Rather than clickbait stories, Booth says the information Aussie car buyers really need to pay attention to can be found right here on the RACV website where there is detailed information about the buying and owning process and what it costs.