Car Costs in Australia: Breaking Down the Components MNY, an everything-money guide launched in 2023, has conducted a series of comprehensive analyses to break down car costs in Australia.

Have you ever wondered why some cars are so much more expensive than other cars, even if they seem similar at first glance? Both between popular car manufacturers, and within each manufacturer's fleet, substantial differences are enormous.

As price is often the single biggest factor that Australians weigh when picking out a car, it's important to understand whether Australians' massive car price differences are justified. That's why MNY decided to expand on our research with fuel-efficient cars and drill deeper into the world of automotive pricing.

MNY, an everything-money guide launched in 2023, has conducted a series of comprehensive analyses to break down car costs in Australia. MNY's chief Editor, Sergiy Kyrychenko, has extensive knowledge and background in vehicle-oriented research. Prior to his current position, he was a statistician for the American Federal Insurance Institute for Highway Safety / Highway Loss Data Institute, for a period 17 years. He said his goal with MNY's current research was to discover connections between specific engine or body types and the vehicle purchase price. His hope is that the study's findings will help Aussies make informed purchasing decisions and identify factors that substantially affect the price of their vehicle.

Average Car Costs by Brand for 2024

Deeper Dive

MNY's staff has assessed the impacts of vehicle body styles, engine sizes, drivetrains, and transmission types on the overall price of a car, and then evaluated the reasons behind these trends and what overall patterns have emerged.

One of the key factors affecting the price of a vehicle is its body type. The median price varies substantially across these vehicle types, with a typical sedan costing twice as much as a hatchback, and a typical convertible costing twice as much as a sedan. The cause for this discrepancy comes from the vehicle's intended audience and the vehicle materials.

A hatchback is commonly a commuter vehicle for a working or middle class Australian family living in the city or suburbs. Their smaller body size and smaller engines make them substantially more affordable and fuel-efficient, and they also lack luxury features. Similarly, a van is likely to be driven by a working class Australian trying to transport goods or people.

An SUV, sedan, or wagon would also fit similar niches to hatches and vans, though perhaps with some additional technology and nicer materials. On the far end of the spectrum, a coupe or a convertible is designed for higher-income Australians who care more about high-end features and engine performance, rather than purchase price or cargo space.

Cylinder size has a clear connection to overall vehicle price, as vehicles with more cylinders (and more engine capacity) get much more expensive. Electric vehicle prices are on par with a 5-cylinder petrol vehicle, which is pricier than most cars but much cheaper than the top-of-the-line options.

6-cylinder engines are usually found in luxury cars, while 8-cylinder engines are featured in super-luxury cars like a Porsche or an Aston Martin. However, these are pretty uncommon, and the average Aussie's car is going to have a 3 or 4 cylinder engine.

A 5-cylinder engine can still be found in the car of an average consumer, since many manufacturers include them in their more powerful models. But as larger engine displacements face increased scrutiny of their efficiency and emissions, consumers may steer away from those options and look towards smaller petrol engines as well as electric options.

Breaking down prices by other components of the vehicle can be very instructive. When considering drivetrain, a stark difference in price between two-wheel-drive and four-wheel-drive cars emerges. Similarly, when considering the three major transmission types, a clear trend is visible between automatic, continuously variable, and manual transmissions.

The source of the price difference is not the feature itself, but rather the type of vehicle where that feature is commonly found. Four-wheel-drive cars are usually SUVs (which are bulky) and sport cars (which are designed for performance), meaning they will have larger and more expensive engines. Meanwhile, two-wheel-drive cars are likely to be a smaller commuter car.

Similarly, manual transmissions tend to coincide with smaller cars that have 3- or 4-cylinder engines and have lower prices. Meanwhile, high-end vehicles are almost exclusively built with automatic transmissions. Continuously variable transmissions, which have gotten more popular in newer models, land in between.

Impact of EV

The evolution of the electric vehicle (EV) market in Australia represents a significant shift in automotive trends, reflecting both technological advancement and changing consumer preferences. While electric cars are generally more expensive upfront compared to their petrol counterparts, this cost disparity is gradually narrowing.

In the Australian market, the starting price of electric vehicles is approximately $45,000, with a majority of models falling within the $60,000 to $100,000 range. This initial cost, though higher, is offset by long-term savings in fuel and maintenance. The average Australian driver, spending around $2,160 annually on petrol, can switch to an electric car for approximately $600 per year in charging costs. Additionally, the maintenance costs for EVs are significantly lower, averaging about $300 for 15,000 km, compared to $1,050 for the same distance in a petrol vehicle.

The market offers various types of electric vehicles, each catering to different consumer needs:

Hybrid Electric Vehicles (HEVs) start at around $26,500, combining a traditional internal combustion engine with an electric motor.

Plug-in Hybrid Electric Vehicles (PHEVs), priced from about $42,500, feature larger batteries that can be externally charged.

Battery Electric Vehicles (BEVs), starting at approximately $47,500, operate solely on electric power, offering a quieter and smoother ride.

Government incentives and tax structures vary by state, further influencing the EV market. For instance, New South Wales and Victoria offer rebates and stamp duty exemptions for new EV purchases, while Queensland provides a rebate for new zero-emission vehicles. These incentives make EVs more accessible and appealing to a wider range of consumers.

Conclusion

MNY's analysis of car costs in Australia, including the electric vehicle (EV) market, highlights the complexity of automotive pricing. Engine type, size, body style, and now the power source significantly influence vehicle prices.

While features like four-wheel drive and 8-cylinder engines typically align with luxury models, commanding higher prices, the rise of EVs introduces a new dynamic. Electric vehicles, despite their higher initial cost, offer long-term savings in fuel and maintenance, supported by government incentives. This makes them an increasingly popular choice in the context of shifting consumer values towards sustainability and efficiency.

The Australian automotive market is evolving with these trends. The variety of EVs available, from HEVs to BEVs, caters to different needs, signaling a shift towards more environmentally friendly and cost-effective transportation options. This evolution in the market shows that the cost of a car is reflective of a complex interplay of features, market positioning, and consumer preferences, going beyond just the technical specifications.