Car pricing can be confusing. Some cars are listed with a drive-away price, others excluding on-road costs, and there’s even more grey area in between.
It pays to know the difference, as understanding the inclusions in a drive-away price can save you thousands when negotiating with your dealer.
Let’s breakdown what you can expect to receive in return for your hard earned, and where there’s room to haggle.
Warranty
It goes without saying that a warranty is included in the sale of all new cars.
Under Australian Consumer Law, new car buyers have rights pertaining to the vehicle they are sold. All new cars must be of acceptable quality (including that it is safe, durable and free from defects), be fit for any purpose disclosed before the sale, match the description provided or demo model, and have spare parts and repair facilities available.
On top of that, car manufacturers provide a warranty that is specific to the vehicle itself. In short, manufacturer warranties protect owners for a set time period or mileage cap if something goes wrong with the car.
During the manufacturer warranty period, which varies across brands, owners can make a claim to have faults fixed free of charge.
There are conditions that apply to this, such as the type of fault reported and whether the car was misused preceding the claim.
However, a manufacturer warranty combined with Australian Consumer Law is just about all-encompassing according to Melbourne BMW dealer principal Daniel Odman.
“Everything is governed by a consumer guarantees under Australian Consumer Law, so irrespective of our warranty we’ve still got obligations to customers,” Mr Odman told CarExpert.
“Our warranty is comprehensive. I mean, you can’t drive your car into a gutter, damage a suspension arm and then make a claim. There are standards for fair wear and tear and you’ve got to use the vehicle in the right way.
“In terms of stuff that shouldn’t go wrong, it’s covered, including all the new digital features as well as the traditional mechanical parts such as the engine, batteries, drivetrains, transmissions, etc.”
Registration
Most manufacturers in Australia quote list prices, or a recommended retail price excluding on-road costs.
However, others advertise new cars with drive-away prices, which include the vehicle purchase price as well as stamp duty, compulsory third-party insurance (CTP), a dealer delivery fee, and registration.
Registration is the annual fee you pay to use roads, and the charge varies between the states.
Dealers are required by the Australian Competition and Consumer Commission (ACCC) to bundle registration fees into the drive-away price of a new car.
The standard included registration period is 12 months, and the ACCC dictates consumers should be informed if the price includes less than 12 months registration.
Stamp duty
Dealers are also required to include the cost of stamp duty and compulsory third party insurance in the drive-away price of a new car.
Stamp duty is a tax charged based on a car’s price which applies to both new and used cars. It theoretically covers the cost of transferring registration from one owner to another, and is calculated differently from state-to-state.
Location, carbon emissions, vehicle size and engine type/displacement are also factored into the cost depending on where the car is sold.
Compulsory third party insurance
Compulsory third party insurance (CTP) is a levy paid by motorists to cover for the harm caused to others in the event of a road accident.
The payment protects both the owner and others who drive the vehicle if they are fault for causing a collision.
In Victoria, Western Australia, Tasmania and the Northern Territory, CTP is bundled into your registration fee and is therefore included in drive-away pricing.
However, drivers in New South Wales, Queensland, South Australia, and the ACT are required to choose their insurance provider. In NSW, it’s a separate charge to your registration.
Dealer delivery preparation
Your new car may be spotless inside and out when you pick it up from the dealer, but it didn’t roll off the container ship that way.
In between, the vehicle is transported between locations and subject to mechanical checks, detailing, and a wash.
As such, dealers bundle a delivery fee into the drive-away price of new cars. The fee isn’t calculated based on the cost of those steps. Rather, it generally equates to a percentage of the car’s retail price set by the dealer.
That’s because the dealer delivery fee is also used by dealers as a device to make money on each car they sell.
By incorporating a margin into the price, dealers can negotiate with potential buyers without worrying about selling the car at a loss.
You’re not getting much for your money here, but the preparation fee is still technically included in the drive-away price.
Luxury Car Tax
In Australia, cars on the more premium end of the spectrum are subject to the Luxury Car Tax (LCT), which bumps up the drive-away price of vehicles over a particular price threshold.
For the 2023-24 financial year, all cars that have a GST-inclusive value over $76,950 are taxed at a rate of 33 per cent on the amount over the threshold.
The LCT is paid by both dealers and individuals who import luxury cars, and incorporated into the final drive-away price.
The threshold is adjusted to $89,332 for ‘fuel efficient vehicles’ that have a combined fuel economy rating of 7.0L/100km or less.
A full tank of fuel
It mightn’t seem like a big deal, but a full tank of fuel is worth a decent chunk of change at the moment.
For example, the Nissan Patrol has a huge 140L tank and filling it up with the required 95 RON premium unleaded costs anywhere between $250-300 in the current climate of high petrol prices.
Any decent dealer should fill the tank before handing over the keys, but it’s always worth making sure.
Electric vehicles are also sold fully charged, although the monetary saving in those cases is nowhere near as significant.
“We make sure that the vehicle is in pristine condition before delivery,” Mr Odman said.
“Electric cars roll out with 100 percent charge, and petrol models get a full tank of premium.”
Sweeteners
Few of the above inclusions are cause for excitement, but some dealers elect to go above and beyond for new car buyers.
During the negotiation process, you might be able to snag a couple of paid options free of charge such as floor mats, window tinting, or some manufacturer merchandise.
Some throw in goodies without any haggling.
“We try to add value with some ‘surprise and delight’ add-ons that we do for our guests based on various brand partnerships we have at the time,” Mr Odman explained.
“We’ve got partnerships with Park Hyatt, Levantine Hill, and Molinari Coffee, and those brands provide us with products to surprise our guests when they buy a car, both at delivery and hopefully after as well.”
