One third of Aussies will buy a new car in 2021, despite high annual costs

author-avatar By on February 08, 2021
One third of Aussies will buy a new car in 2021, despite high annual costs

New research has revealed almost six million Australians will invest in a car this year.

Car subscription service Carbar found this was despite 41% of car owners not feeling in control of their car expenses, which costs $5,100 annually or $9,000 for those with loan repayments. 

The majority of people (34%) intend to buy a second-hand car this year, while around 22% intend to buy a new car. 


In the market for a new car? The table below features car loans with some of the lowest interest rates on the market.


Around 2.2 million adults are looking for more flexible options, with one million looking to car subscription service, the majority of these millennials. 

Carbar chief executive Des Hang said consumers who had suffered financially as a result of COVID were looking for new ways to save on vehicles. 

"This study indicates that the typical Australian loses around $5131 per year on a new car, factoring in depreciation, insurance, maintenance and repayments," Mr Hang said.

"Almost half of Australians also indicated they do not feel in control of their car expenses too.

“Remarkably, those hardest hit by COVID, millennials, also tend to spend up to $7300 per year on their car -- thousands more each than both Gen X and the Baby Boomers." 

Mr Hang said many people didn't understand how expensive owning a car could be, and said subscription services offer a cheaper alternative.

“For us, this shows a lack of awareness in the market around the true cost of owning a car, a point we are keen to champion and increase awareness on," he said.

"Subscription is a flexible alternative to car ownership that can free up funds to service personal debt or gain greater control over your finances.”

Carbar costs start from $129 a week, which includes everything except fuel, with the company the first to launch car subscription services in Australia. 

Evidencing the popularity of the services, Car Next Door reported in November it had seen a 245% increase in customers between April and October, boasting 12,000 new users added each month. 

Holden attempted to join the movement in 2018, launching their own car subscription service Maven in partnership with GM, but this was shut down at the end of 2020 with just 6,000 active members. 

No cash incentives for buying electric vehicles

The Federal Government released its plan for supporting electric vehicles over the weekend, with no direct financial help for motorists purchasing electric vehicles. 

Instead, the government is looking at supporting the required infrastructure for electric vehicles and helping businesses convert their fleets to electric cars. 

It's a stark contrast to other developed nations, with the United Kingdom banning the sale of new petrol and diesel cars from 2030, and more than half of all new car sales in Norway now electric thanks to large tax incentives. 

The Australian Capital Territory is leading the way in Australia, offering two years free registration for electric vehicles from May, and interest-free loans of up to $15,000 to purchase electric vehicles. 


Photo by Patrick McGregor on Unsplash 

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $30,000 loan over 5 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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