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.”
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.
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?