Are cars overpriced in Australia?

Yes, most Australians and independent analysis agree that cars are overpriced in Australia compared to markets like the USA, Japan and the Middle East. The reasons are structural rather than just dealer mark-ups. Australia is a small right-hand drive market with about 1.2 million new car sales per year, so manufacturers cannot achieve the same economies of scale as in the US where 15 million cars are sold. Every car except a few remaining locally assembled models is imported, incurring shipping costs of $2,000-$5,000 per vehicle, 5% import duty unless it comes from a free trade agreement country like Japan, Thailand or Korea, 10% GST on top of that, and for expensive cars, Luxury Car Tax of 33% on the value above about $80,567 for regular cars and $91,387 for fuel-efficient cars in 2025. This stacking of taxes means a car that costs $40,000 before taxes can easily become $55,000 drive-away. For example, a Ford Mustang GT that starts around $46,000 USD in the US is about $85,000-$95,000 AUD in Australia, and a Toyota LandCruiser that is $56,000 USD in the US is $90,000-$100,000+ AUD here. Wages are higher and compliance costs for Australian Design Rules also add cost. The introduction of more Chinese brands like MG, BYD, GWM, Chery and LDV since 2020 has helped push prices down at the budget end.