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What are some of the best luxury cars in Australia?

Vidhu Bajaj avatar
Vidhu Bajaj
- 9 min read
What are some of the best luxury cars in Australia?

Many equate success with flashy and luxurious cars, which is why the luxury car market is constantly growing. If you’re looking for a new set of wheels and want something with a bit more flash or luxury, then the luxury car market might have something for you.

What is a luxury car?

A car is often considered a luxury car when it comes with a high price tag and higher levels of comfort, performance, and features than most mainstream cars. These cars are typically designed to provide an elevated driving experience and a sense of indulgence for the occupants. However, what may seem luxurious or extravagant to one person might be commonplace to another. Therefore, the concept of a luxury car is often subjective. Still, there are some generalised ideas of what makes a car luxurious, such as features that go beyond basic necessities.

Interestingly, the Australian government takes a more practical approach to determining what qualifies as a luxury car by categorising vehicles based on their price range. According to the Australian Tax Office (ATO), a car priced above a certain threshold attracts a Luxury Car Tax (LCT), while those priced below it don't. If you’re considering purchasing a luxury car, you should check the current LCT. The Luxury Car Tax threshold is revised annually and is currently set at $89,332 for fuel-efficient vehicles and $76,950 for other vehicles for 2023-24.

A round-up of the best luxury cars in Australia

Below is a list of some of the best luxury cars in Australia according to Drive’s 2023 Car of Year awards list. 

1. Volvo XC40

The Volvo XC40 has been named the Best Small Luxury SUV for the third consecutive year at the Drive Car of the Year awards. This small SUV impresses with its excellent ability to stay steady and under the control of the driver, no matter the conditions. It’s also known for a strong, stable and smooth drive and is great value for money.

2. Jaguar F-Pace 

The Jaguar F-Pace has again been named the 2023 Drive Car of the Year Best Medium Luxury SUV. This is the second consecutive year it has won this award. Its refined luxury and performance heritage make it stand out in its class, complemented by its impressive ride quality, state-of-the-art technology, and user-friendly infotainment system. It boasts a classy exterior and an elegant, spacious cabin with excellent storage. Drive calls it 'a perfect all-rounder – packed with features, stylish, luxurious and enjoyable to drive.'

3. Mercedes-Benz C-Class 

The Mercedes-Benz C-Class was awarded the Best Medium Luxury Sedan at the 2023 Drive Car of the Year awards. It boasts new looks, updated interiors and advanced technology, setting it apart from its competitors. This new generation medium sedan offers improved fuel efficiency, enhanced spaciousness, and impressive safety credentials compared to its predecessors.

4. BMW i7

The BMW i7 was named Drive's Best Electric Vehicle over $120,000 for 2023. It flaunts an array of luxurious features, highlighted by an opulent cabin equipped with cutting-edge infotainment and driver assistance features. The car guarantees a powerful and delightful driving experience. The only possible drawback is its size, which might pose some inconvenience for city drivers.

Which luxury car should you buy?

If you have the means to purchase a luxury car, there is a wide selection of vehicles that suit your tastes and needs. However, determining which luxury car to buy can be a challenging decision. While car review sites like Drive and CarsGuide can help you with information and expert opinions, there is no universally perfect car for everyone. 

The right choice depends on finding a car that suits your needs and provides the best value for your investment, whether in terms of the desired level of luxury or performance capabilities. Here are some factors to consider that could help you make an informed choice:

1. Compare safety ratings

Regardless of the type of car you're looking at buying, prioritising safety is essential. A good starting point could be visiting the Australasian New Car Assessment Program (ANCAP) website to view and compare the safety ratings of different vehicles that you may be interested in. ANCAP is considered the go-to place for measuring and assessing car safety. They do thorough testing on all levels of safety and reliability, including crash testing all new cars that come onto the Australian market. 

Once on the ANCAP Safety website, you can search for the model or models you have on your shortlist or that you’re interested in to learn about their safety rating. Alternatively, you can set the category filter to 'luxury' to get a list of all the luxury vehicles with their ANCAP Safety rating.  

When comparing the ratings, remember that ANCAP Safety's rating criteria are updated annually, but the ratings themselves are valid for up to six years. This means that while a car will maintain its rating for six years, a more recent rating awarded to a car with the same score can indicate a higher level of safety. You can sort the results on the website according to the latest rating year to explore the safest cars within a particular category. It also means that you’re probably better off choosing a car that’s been assessed more recently by ANCAP Safety.

2. Fuel efficiency

Another important factor you should consider when looking at a new car purchase is its mileage or fuel efficiency. This is especially important if you plan to drive it frequently or cover long distances on a regular basis. Luxury cars are typically high-performing cars, but in the past, it was often a trade-off against fuel efficiency. However, many luxury car manufacturers now use modern technology to optimise fuel efficiency without compromising performance.

A fuel-efficient car is also good for the environment and your pocket. There is also the option to choose electric or hybrid cars instead of conventional cars if you prefer a greener ride. Even though these environmentally friendly options might be more expensive, they can save you money in the long run. However, if you are buying a conventional car, make sure to compare the mileage to make an informed choice.

3. Features and technology

Luxury cars often come with cutting-edge features and the latest technology, setting them apart from lower-class vehicles. While they might not necessarily be affordable, they are generally high-end automobiles equipped with innovative features to elevate the overall travel experience for the occupants.  

When comparing luxury cars, it's best to thoroughly examine the range of features offered. As we’ve previously pointed out, safety is paramount, and it's worth checking for the latest safety features in any car you’re looking to buy. Besides inspecting the interiors and safety features, you might want to check for performance-oriented features like adjustable suspension settings and different driving modes.

4. Price of the car

The price of a vehicle is a significant aspect of any car-buying decision. While luxury cars typically command higher prices than other vehicles, the cost of a luxury car can vary considerably based on the specific make and model you choose. Regardless of your preferences, it's essential to establish a practical budget to make sure you don't go overboard, even if your budget allows for some indulgence.

When considering the costs of buying a car, you should also consider the other costs of owning a car, like insurance, fuel costs, and what you'll pay for the regular maintenance and upkeep of the vehicle.

As luxury cars are mostly high-performing vehicles, they're likely to have higher ongoing costs across the board. For instance, maintenance costs are more expensive due to specialised parts and servicing requirements. To minimise long-term costs, it's worth looking up different car brands to pick a reliable one with good after-sales service.

You may also need to pay the luxury car tax (LCT) as an additional cost when purchasing a luxury vehicle. This tax is imposed at a rate of 33% on the amount above the LCT threshold set by the ATO. Although the tax is paid by businesses engaged in selling or importing luxury cars, in most cases, the dealer will pass on this expense to the buyer when setting the sale price of the vehicle.

Financing your luxury car

If you’d rather not pay for your luxury car in full upfront, you may consider applying for a car loan. Various car loan products are available in the market, each with different borrowing limits and features. For example, some providers may allow you to borrow up to $100,000, while others may approve loans up to $250,000 or even higher. 

However, it's important to note that higher borrowing limits usually apply to secured car loan products. This is where the lender takes a mortgage on your car and holds your car as collateral in case you ever default on your loan. You also typically need to have a good credit score and meet stringent income criteria to qualify for a higher loan amount. Still, the exact requirements vary between lenders and comparing several loans in the market can help you find one that best suits your needs.

Before applying for a car loan, you might like to use RateCity's car loan calculator to determine the repayments for different loan sizes. This can enable you to set a practical budget for your purchase without overextending yourself. Additionally, consider checking your credit score before applying for luxury car finance, as it can influence your borrowing capacity and the overall application outcome. ​​

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Product database updated 23 Jul, 2024

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.