Should government step in to help Australians quit their big car habit?

For several years Australians have chosen SUVs and utes over smaller sedans or hatchbacks when looking to buy a new car.

Car sales data for 2023 has revealed all of the top ten selling cars over the year were SUVs or light commercial vehicles — and passenger cars made up less than a fifth of all sales.

Late last year, regulators even proposed marking the trend in paint, saying the standard parking size should be lengthened by 20 centimetres, to accommodate Australians' big car habit.

But bigger cars come with some costs: they do more damage to roads, often pollute more, and can pose a bigger risk to safety — both for drivers and pedestrians.

How government encouraged bigger cars

Last year The Australia Institute published a report highlighting their concerns that tax incentives were driving Australians to pick up larger cars.

The progressive think tanks says there were two incentives in Australia's tax settings that favoured larger, more expensive vehicles.

"Temporary Full Expensing" allowed for vehicles to be claimed as an immediate, one-off tax deductible expense, and while that deduction was capped at $60,000 for passenger vehicles, there was no limit for vehicles that can carry at least a tonne. 

And the "Loss Carry Back" tax offset allows a business to claim the purchase of a new vehicle against the previous year's profits if that vehicle creates a net loss for the business.

Institute director Richard Denniss said Australians didn't just wake up and decide they wanted bigger cars, rather "our tax system makes it attractive to do so".

"If a vehicle is capable of carrying more than a tonne then from a tax point of view those vehicles become very tax effective for small business owners and tradies, whether they need to carry a tonne around or not. Our tax system is the reason that our car fleet looks nothing like the car fleet of most major countries," Mr Denniss said.

Mr Denniss said planning laws can also enable larger cars, including through parking decisions.

"At the moment we give priority parking in so-called loading zones to people that buy these big commercial vehicles. They can pull up right in front of a cafe and park conveniently in a loading zone, not because they're loading anything, but because they're driving a commercial vehicle," he said.

Federal Chamber of Automotive Industries CEO Tony Weber argued Australians had moved into SUVs and utes because they now contain the same comforts as sedans, and also offer more flexibility for families and small business owners.

But both the FCAI and Australia Institute agree that because Australia is missing a fuel efficiency standard — which would set a cap on the total emissions of a car brand's fleet — the nation is lacking a useful tool to reduce emissions and encourage more efficient cars.

The federal government is currently consulting on a fuel efficiency standard — Mr Denniss said whether that would encourage Australians towards smaller cars would depend on how that standard is structured.

Road damage, safety risks and climate concerns

Bigger cars may include more comforts and flexibility for drivers, but they come with several complications.

"They're very heavy, and when you double the weight of a vehicle it does 16 times as much damage to the road; they're often diesel, there's a lot more particulate pollution  ... they're often louder, and in narrow city streets they often make narrow streets really hard, if not impossible, to navigate," Mr Denniss said.

Professor Brian Fildes from the Monash University Accident Research Centre said the link between larger cars and safety was obvious.

"Some of the new SUVs and four door pickups are increasing enormously in terms of their weight, and physics alone will tell you if two cars collide ... the mass difference increases the risk of being killed and seriously injured quite dramatically," Professor Fildes said.

That will remain an issue even if Australians switch to electric vehicles, because they are generally larger and heavier because of their batteries.

Mr Denniss said if government wanted to discourage people buying bigger cars, its first step should be to end tax discounts for those vehicles.

He also said more taxes should account for weight and fuel efficiency.

"We need to look at things like differential taxes on new vehicles based on their weight and based on their fuel efficiency. Given we know big heavy vehicles do more damage to roads they should pay a lot more in car registration, not just a bit more," he said.

He said financial incentives could also be introduced to encourage smaller car purchases, and planning could favour smaller cars, such as converting some loading zones to priority parking for smaller vehicles.

Mr Weber said the government shouldn't be dictating what cars people drive.

He argued there were more obvious safety wins to be gained by tackling mobile phone use, which he said had reached a crisis point and deserved national attention.

"The biggest issue around road safety is behaviour, to be frank," he said.

Professor Fildes said the bigger car trend would likely continue if left untouched by government.

"It's certainly something that needs a lot more thought, you're not going to get the manufacturers to reduce their focus on these big vehicles [because] that's what people are buying," he said.

"The only thing that occurs to me is to get more people out of cars."