The Ford Mustang was the best-selling luxury sports car in Australia in 2023, recording 1,475 new unit sales to capture 21.5% of the sub-$80,000 sports car market. This placed it ahead of the BMW 2 Series Coupe and Convertible (1,164, 17.0%), which also came in at under $80,000.

Of the sports cars to fall between $80,000 and $200,000, BMW’s 4 Series Coupe/Convertible garnered 858 sales to establish a market share of just under a quarter (24.1%). The Mercedez-Benz C-Class Coupe/Convertible was also popular (808, 22.7%), while Chevrolet’s Corvette Stingray was a distant third (338, 9.5%).

Venturing into super-luxury territory, the Porsche 911 was comfortably the most popular sports car above $200,000, with 558 units sold and a market share of 41.4%. The Ferrari and Lamborghini Coupe/Convertibles were the only other cars with a market share above 10%, with the former at 215 (15.9%) and latter at 159 (11.8%).

How much can I expect to pay for a luxury car?

The cost of your luxury car will depend on several key variables, most notably the manufacturer and the size and strength of the car. For instance, it isn’t surprising that the Fiat 500, as the smallest luxury car available in Australia, is also the cheapest, retailing for just $27,220.

However, when you move up in sizes and power, you’ll also likely notice an increase in cost. For example, among medium cars, the Tesla Model 3 comes in at $61,900, while the BMW 3 Series steps it up by starting from $80,200. The Mercedes-Benz is similarly priced at $79,200.

Sports cars can often be the most expensive of the bunch, with the Ford Mustang being among the cheapest at a base price of $52,590 but reaching up to $104,990. On the other end, however, Ferraris retail from just over $400,000 to well above $800,000. Ultimately, it’s crucial to take the time to consider your budget and work out which luxury vehicle is right for you.

What is the Luxury Car Tax?

Luxury Car Tax (LCT) is a tax imposed on imported passenger cars (including demonstrators) with a GST-inclusive value exceeding specific thresholds. This tax is set at 33% above the following LCT thresholds:

• Fuel-efficient vehicles: these are cars with a claimed combined fuel consumption of less than 7L per 100 kilometres. The LCT threshold for fuel-efficient vehicles is $89,332 (including GST).
• Other vehicles: this category includes cars that don't meet the fuel-efficiency criteria or lack a claimed fuel consumption rating. The LCT threshold for these vehicles is $76,950 (including GST).

LCT is typically paid by businesses that sell or import luxury cars (dealers) However, individuals who import a luxury car themselves are also liable to pay LCT. When importing a luxury vehicle, it’s important to consider LCT and the amount it adds to the purchase and import cost of your car.

What to consider when buying a luxury car

A luxury car is, in many cases, a significant investment, so it’s important to consider all angles before you buy it. Keep the following tips in mind when you approach the purchase process:

Determine what you need from your car

Before diving into the luxury car buying process, it's essential to determine what you need from your vehicle. Consider factors such as seating capacity, storage space, technology features and driving performance. Additionally, you’ll need to think about what powers your car, such as whether you opt for a petrol, diesel, hybrid or electric model.

Are you looking for a sporty coupe for weekend drives, a spacious SUV for family adventures or a luxurious sedan for daily commuting? By identifying your specific requirements and preferences, you can narrow down your options and focus on finding a luxury car that meets your needs and enhances your driving experience.

Consider your budget

Luxury cars come with a wide range of price tags, so it's crucial to establish a budget before starting your search. Consider not just the upfront purchase price but also ongoing expenses such as insurance, maintenance and fuel costs. When it comes to insurance and maintenance, these are likely to be more expensive for luxury cars than other standard model.

Determine how much you can comfortably afford to spend on a luxury car without straining your finances. This may mean that you’re looking for the cheapest luxury cars on the market if you can’t quite afford the middle or upper-tier models.

Have an idea of how you’re buying the car

Decide whether you'll be buying the luxury car outright with cash, financing it with a car loan or obtaining a novated lease. Each option has its own advantages and considerations.

If you're paying cash, you'll avoid paying any interest or loan fees but the purchase may deplete your savings. Financing allows you to spread the cost over time, but you'll pay interest and fees throughout your term which could increase the cost by thousands of dollars.

Novated leasing offers tax benefits through a salary sacrifice arrangement, such as saving on GST and income tax, as well as having your running costs included in your lease agreement. However, this is limited to those who work for employers who are willing to offer such an agreement.

Keep an eye on resale value

New luxury cars, like all models, tend to depreciate quickly, so it's important to consider resale value when buying a luxury car. Research the depreciation rates and resale values of different luxury car models to get an idea of how well they hold their value over time.

Choosing a luxury car with strong resale value can help minimise the financial hit when it's time to sell or trade in the vehicle and potentially reduce your chances of negative equity. Features such as brand reputation, model popularity and vehicle condition can all influence resale value, so be sure to factor these considerations into your decision-making process.

Look for fuel efficiency

While luxury cars are often associated with high performance and opulent features, it's still important to consider fuel efficiency when making your purchase. Opting for a luxury car with good fuel efficiency, such as purchasing one with a green car loan, can save you money on fuel costs in the long run and reduce your environmental footprint.

Look for models with fuel-efficient engines, aerodynamic designs and hybrid or electric powertrains for the best fuel economy. Consider your driving habits and the typical petrol prices in your area when evaluating the fuel efficiency of different luxury car models.

Prioritise safety features

Safety should always be a top priority when buying any car and that’s no different for luxury vehicles. Look for those equipped with advanced safety features such as adaptive cruise control, automatic emergency braking, lane departure warning and blind-spot monitoring systems. These features can help prevent accidents and protect you and your passengers in the event of a collision.

Also, it’s crucial to check safety ratings and crash test results from ANCAP to ensure the car you're considering offers excellent safety performance. Investing in a luxury car with top-notch safety features can provide peace of mind and enhance your overall driving experience.

Should you buy new or used?

Deciding whether to buy a new or used luxury car depends on your budget, preferences and priorities. According to Bill Tsouvalas, Managing Director of Savvy, it’s essential to consider the pros and cons of each option before diving into your purchase.