Car Advice

What is driveaway pricing?

When buying a new car you’ll often see the price ‘Driveaway’, or maybe it will be plus on-road costs. But what does that mean?

THE MOST IMPORTANT price you need to know when buying a new car is what the driveaway deal is. Without this, things like stamp duty, luxury car tax (LCT, and this one can sting!), rego, and dealer delivery can add thousands on top of what you thought was a good price.

When you see a deal or ask a dealer for a deal, make sure you know the driveaway price. What that means is that the following are included: stamp duty, LCT (if applicable), compulsory third party insurance, registration, and dealer delivery. Otherwise, they become the ‘plus on-road costs’, and you’ll need to fork out for them.

Let’s break those down.

What is Stamp Duty?

Stamp duty varies per state and territory, so how much you pay depends on which state you’re registering the car in. The amount you have to pay is usually tiered at a certain rate and is affected by things like how environmentally friendly the car is, state recognised segment – such as luxury, upper luxury and super luxury, and if it is new or used.

For instance, in Victoria, Vicroads considers ‘Low emissions’ passenger vehicles as those which emit less than 120gm CO2 per km. The rate applied to this type of purchase (at any purchase price) is $8.40 per $200. Yet Vicroads charges the same amount for a normal passenger vehicle ($8.40 per $200) regardless of its emissions, so you aren’t being rewarded for buying green unless it’s an expensive one (more below). But if you live in the ACT, that territory doesn’t charge any stamp duty on vehicles that emit less than 130gm CO2 per kg. Go figure.

And there’s more. If the vehicle (in Victoria), is considered a luxury passenger vehicle ($67,525 up to $100,000), you will have to pay a higher fee, which is $10.40 per $200. Or if it’s a really expensive car, like a ‘super luxury vehicle’ (valued at more than $150,000), the fee is $14.00 per $200. An electric vehicle pays off here, as it falls under the low emissions vehicle tier.

What is the Luxury Car Tax?

The Luxury Car Tax (LCT) is almost 20 years old and has made Government coffers a huge amount of cash. LCT applies to vehicles purchased over the GST-inclusive price of $67,525 for the 2019–20 financial year. It is charged at 33 cents to the dollar or 33 per cent of the value over the threshold amount.

The calculation to work out the amount of Luxury Car Tax payable is: (LCT value − LCT threshold) ÷ 110 × 33

For example, on a $100,000 vehicle you would calculate the following:

($100,000 − $67,525) ÷ 110 × 33

$32,475 ÷110 × 33

= $9,742.50

What is Dealer Delivery?

Unlike government-mandated charges such as stamp duty which have a set fee, dealer delivery costs vary between car brands. Beyond the price to buy the vehicle, the added dealer delivery charge is, usually said by the dealer, to cover the cost of having the car delivered to the dealer on a truck, getting it detailed, performing a mechanical check, and more. But of course, one could argue this should be covered in the cost to purchase, so dealers exercise some creative freedom with how they price this to customers – if you don’t take notice, you’ll get slugged potentially thousands, but if you’re thrifty, you might save the same amount by having the dealer wavier this flexible margin.

Registration and Compulsory Third Party Insurance

It seems obvious but if you want to drive your new car away from the dealership it must have registration and compulsory third party Insurance. Sometimes the latter is included in the cost of registration. This is another government-mandated cost that must be paid to have a registered car driving around on the road. It covers things like medical costs if you hit someone or are involved in an accident.

In Victoria, for instance, CTP is included in the cost of registration for vehicles. Part of the payment goes to the Transport Accident Commission (TAC) and covers treatment and benefits for anyone injured in a road accident – even if you’re claiming medical expenses when it was your own fault.

CTP varies for each state, but the basic principle is the same, and again, it must be paid.

What doesn’t driveaway pricing include?

You’re still going to need to organise proper third-party or comprehensive insurance for your new car because CTP doesn’t cover damage to property or your car. And you’d be nuts not to get comprehensive insurance on a new car worth thousands of dollars – anything can happen, and you might not even be at fault.

You also should think about things like a full tank of fuel (or ask for it to be included), because some dealers looking to save a buck might leave you with only a whiff of petrol in the tank. And you’ll need to begin paying your registration costs once it’s due, and consider other ongoing costs like servicing, which can sometimes be prepaid for up to five years if the manufacturer offers fixed-price servicing. 

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Alex Rae

Alex Rae