What is considered an expensive car these days? | Opinion

Not long ago, $100,000 was an inconceivable amount of cash for most Australians to even consider spending on a new car - a sum many would previously describe as not just expensive but outrageous.

However, along with the rising cost of everything, car prices are also creeping north and there have never been more cars with pricetags that stray into six-figure territory.

So, what is an 'expensive' car in the eyes of the Australian consumer and is dropping $100k on a car madness or quite normal in today's market?

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On a simplistic level, the mean price paid for a new car in Australia is arguably fairly reasonable. Earlier this year, a Canstar customer survey found that the average spend on a new car is $40,916 nationwide.

Looking around the country, Western Australians spend the most at $45,068, while Tasmanians spend the least with an average of $34,201. But it's only when you start to break down the figures that Australia's demand for pricey machinery starts to become apparent.

The term 'expensive' is a subjective one but a good place to start when looking for a definition is with the government's Luxury Car Tax (LCT).

As of the 2023-2024 financial year, vehicles costing more than $76,950 are subject to LCT with the value above that threshold figure attracting 33 per cent tax. The tax was originally introduced to encourage Australians to shop locally and support home-turf manufacturing by buying home-grown brands that were typically inexpensive.

However, the three most popular at the top of the list are the Ford Ranger, Tesla Model Y and Toyota Hilux.

However, with the death of local manufacturing, there are no Australian-made Holden, Ford or Toyota price lists to use as a guide for what constitutes an affordable car or, for that matter, a 'luxury' car.

When you consider Kia now has a circa $100,000 car in its ranks, Mazda will soon introduce a large SUV for about the same and the most expensive Toyota is $141,000 before on-road costs, you could argue the government might be aiming a bit low with its 'luxury' threshold...

Let's look elsewhere.

Taking information from several financial sources, the general consensus suggests that spending no more than 15 per cent of your annual income is advisable. Therefore, spending more than that limit would make the car (in that individual's case) expensive.

According to the Australian Bureau of Statistics, the median full-time Australian worker income in 2022 was about $78,800 while the average household income is closer to $121,000. That means, depending on your cohabiting status, an expensive car is one that costs more than $11,820 and $18,150 respectively.

It would appear that a 0,000 car is still therefore, considered by most to be an ‘expensive’ acquisition but ,000 to ,000 is not.

But as we saw at the start, most Australians are spending far more than that. Spending the national average of around $40,000 on a car is actually three times more than is advisable for someone on an individual's average income or about double for the average household.

If you take the general consensual advice of financial experts, a $40,000 car is very expensive to the average Australian, whereas the buying behaviour or average Aussies suggests it absolutely isn't. But it gets stranger still.

In the top ten most popular cars sold to date in Australia 2023, you'll find plenty of affordable options such as the Hyundai i30, MG ZS and Mitsubishi Triton. However, the three most popular at the top of the list are the Ford Ranger, Tesla Model Y and Toyota Hilux.

All three of those hottest-selling models offer at least one variant in the range that costs more than $70,000 and not one is available for less than $50,000.

It would appear that a $100,000 car is still therefore, considered by most to be an 'expensive' acquisition but $40,000 to $70,000 is not. As to what's regarded as 'too expensive'? Well, that one's easy.

Something is only too expensive when no one is willing to pay what the seller is asking, and there aren't too many examples of those cars in Australia's unique market.