SUVs – Aussies are obsessed with them but do they realise the cost?

Over the past decade or two, SUVs (sport utility vehicles), especially utes, have become the vehicle of choice for many when looking to upgrade the family car. Even those without families are now more likely to buy an SUV as their next car. But such a choice comes at a cost, one that must be paid on each visit to the petrol station.

According to a new report released by The Australia Institute, if Australians whose driving needs could be met by a smaller vehicle made the switch away from SUVs, they would save a combined $13 billion on fuel costs and help reduce our emissions to those of the UK.

And yet, these fuel-hungry vehicles continue to rise in popularity. In 2022, more than half of all new vehicles sold were SUVs.

The authors of The Australia Institute report – Matt Saunders, Matt Grudnoff and Rod Campbell – do not pull any punches when describing Australians’ penchant for these vehicles. The opening sentence of the conclusion reads: “Australians buy big dumb cars and that means we spend a lot more on petrol than we should.”

Dumb cars

It’s interesting to note that the authors refer to the cars, not their owners, as “dumb”. And that is no accident. Aside from potentially alienating readers of the report by referring to them that way, the report reveals how the current tax regime actually gives buyers of certain types of SUV a tax advantage over those who might be equally suited to, or even better off with, a more compact car.

The report outlines how the current tax settings provide two incentives for business owners to buy a dual-cab ute rather than a compact sedan. The incentives allow for these owners to take advantage of the Temporary Full Expensing policy, which allows the purchase of new business assets, including motor vehicles, to be claimed as an immediate and full one-off tax-deductible expense.

However, while this claim is capped at $60,000 for passenger vehicles, there is no such cap in place for SUV utes. A top-selling dual-cab ute can be written off instantly as an annual expense.

For tradies and others who work in industries where utes are the most suitable vehicle, this incentive makes perfect sense. But the ute advantage applies to all businesses, so a suburban lawyer or your local accountant will be advantaged by buying a four-wheel-drive ute – which quite possibly will never leave a sealed road – rather than a small passenger vehicle of the same price.

Such incentives have contributed to Australia becoming disproportionately high in SUV ownership compared to many other Western countries. In the UK, for instance, SUVs account for only three of the country’s top-10 selling cars. Here, the figure is five out of 10.

Buyers beware

Unsurprisingly, the report recommends several changes in policy to help reverse the trend. Among the seven key recommendations made are a switch to an improved emissions and fuel consumption test regime so consumers can make accurate purchasing decisions; a phasing in of mandatory emissions and fuel consumption standards for all new vehicles, and, if the Temporary Fuel Expensing policy is to be extended, reconfiguration towards low emissions purchases.

Australia is, of course, a wide, brown land, and for those who live or travel outside the major cities, an SUV may well be the perfect car. In truth, though, those major cities are where the vast majority of Australians live.

If you are part of that vast majority, and your needs do not include a requirement for a large SUV, consider a smaller vehicle when next buying a new car. It might save you money in the long run. (especially if some of The Australia Institute’s recommendations are adopted) and it may also go a small way to helping save our planet.

Are you in the market for a new car? Would you consider buying something other than an SUV? Why not share your thoughts in the comments section below?

Also read: What is ‘hypermiling’ and can it help you save money on fuel?

Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. Obviously it comes down to what the vehicle is to be used for, and it’s ability to perform adequately in many different situations. I personally initially had small cars, then as family got larger, so the vehicles became larger station wagons and people movers. In retirement my needs have changed again to towing and holidays, so has my choice of vehicle to a large 4WD that can tow safely well within its limits. Also I chose to buy second hand to get better value for money, as vehicle was already fitted with over $12,000 worth of accessories. Many people of all ages that I know are buying vehicles with the versatility to do all things, as many people tow trailers, boats, and caravans and often also take bikes and canoes with them.

  2. I would love to go back to driving a small car, the problem for me is they are too low to the ground and my hips and knees object strongly when getting in and out of them. The ASX I currently drive is a better option for me

  3. It is no business whatsoever of the Australia Institute or anyone else as to what cars people choose to buy. If that is what a person would like to own and drive, that is their choice, not some eco or economist nutters concern.
    I’m sure that the purchasers of those vehicles are well aware of the real costs of owning and running them and if they can afford it, that is their choice.
    What we chose to spend our money on is for us to chose, no-one from Government or “think” tanks has any right to tell anyone else how that money “should” be spent.
    It’s a big wide open country and there is room for all sizes of vehicles to go out and enjoy it to our hearts content.

  4. I’ll add to the “save our planet” comment. Especially in the Australian context, that amounts to being a dumb point. The totality of Australian personal vehicles has absolutely no effect upon the state of the planet. Australian emissions across the board have had and will have no measurable effect upon the climate or weather of neither the northern nor southern hemispheres.
    The only effect that could be expected if every Australian car owner converted to an electric vehicle in the next month is a massive transfer of money out of the pockets of Australians into the pockets of the manufacturers (no looking more and more like being mainly Chinese).
    There is no be benefit to be gained by doing so.
    Buy what you like, not what any so called smart expert thinks you should.

  5. This article was clearly written by someone who does not need a higher vehicle that is easier to get in and out of.

    With a bad leg due to injuries incurred during my time in the services, I struggle to get into most small or compact cars. An SUV or some of the small SUVs is my vehicle of choice, by necessity not for any other reason.

    Personally, I think it is my choice what vehicle I drive and put fuel into and the rubbish about the environment is irrelevant. It is not the car that is dumb, but the authors showing their lack of appreciation for why some drivers migth find an SUV as appropriate.

    I note they did not single out a range of cars as being “dumb”, just those that support their article. Maybe luxury cars, large cars, fuel inefficient cars, and utes should have been included in the article, but no, the authors focus on SUVs, which make sense to many families and to people like me. It is not about any tax advantage or incentive, just the suitability of the vehicle for the role it is being called on to support.

  6. a lot of people buy the SUV s especially the older people is the entrance and egress is much better for them. Nothing else because all cars other than SUV s you sit close to the ground and with crook knees and hips they are the obvious choice.

  7. After being hit head on in 2003 in a 100km zone and surviving, because of the 4WD we were driving, there is no way I would even consider downsizing. The two in the vehicle that hit us did not survive. Another 4WD replaced the wrecked vehicle and, after 20 years, is now being replaced by another 4WD.

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