Opinion
Fuel for thought: Do you really need a second car?
Dominic Powell
Money EditorReal Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You’re reading an excerpt − sign up to get the whole newsletter in your inbox.
If there’s one thing that Australia loves – aside from being girt and celebrating our awkward breakdancing athletes – it’s cars. According to statistics tsar the ABS, there were 20.1 million registered motor vehicles in the country as of 2021, which is only 6 million less than the number of actual people in the country. What is this, Disney Pixar’s 2006 animated hit Cars?
On those numbers, you can probably figure out that a lot of us have more than one car. Again, according to the ABS, the average number of motor vehicles per household in Australia is 1.8, and more than half of us report having at least two cars in our garage.
Most Aussie households have more than one car – but is it really necessary?Credit: Fiona Bianchinotti
Now, let me say before we get any further, for many people, having two cars is a non-negotiable. Either because of the size of your family, or where you live, or your work, needing a second vehicle to zip around in is essential. A lot of money advice is subjective, and answering whether or not you need a second car is no exception.
What’s the problem?
Nevertheless! Cars are expensive, both to buy and to run, and are generally considered the second most expensive purchase we’ll ever make after a house. They’re also pretty bad for the environment, and generally inconvenient to store, operate and maintain.
In a perfect world, none of us would have cars and would walk everywhere, but we don’t live in a perfect world, we live in one where our capital cities are thousands of kilometres apart.
What you can do about it
If you’ve thought – or conversely, never thought – about ditching your second car, read on:
- How much you could save: According to the Australian Automobile Association’s excellent online data tracker, we spend on average $23,000 a year on transport costs, with nearly all of this being directly related to the cost of running a car. This includes about $5000 on fuel, $1700 on registration, and $11,000 on car loan repayments. If your second car is used less frequently, these costs might be a bit lower, or it may not be on finance. However, ditching it could still mean thousands of extra dollars to spend on your mortgage, a holiday, or a generous gift for your favourite personal finance newsletter writer. If you’re still on the fence, pick the car you use the least and track how many times you drive it and how far over three months. Also, tally up how much you spend during that period on fuel, maintenance, or insurance. At the end of the three months, look at the trips you’ve taken and the amount you’ve spent, and see how the numbers stack up. How many trips were essential, or could they have been on public transport instead? And how much would it have cost if you’d used Uber or another ride-share service for all those trips? Depending on your commuting distances and habits, it might still be cheaper than owning a car.
- Explore other options: The classic catch-cry when it comes to this topic is always “buy a bike”, and with the advent of affordable, feature-filled e-bikes, this has become a more realistic option. A decent e-bike will set you back $1000 to $2000, or many rental services will loan you the bikes for a weekly fee of $50 to $60. E-bikes are fast, convenient, and have the bonus effect of offering a decent bit of exercise on the side. If that doesn’t appeal to you, there’s always the option of supplementing with a ride-share service, such as Uber or GoGet.
- Downsize, don’t sell: Okay, so maybe you’re pretty set on keeping your second car, and that’s fine. But perhaps you could consider downsizing? Julia Hunter, RACV’s general manager of mobility, says the organisation has been seeing an uptick in the number of people downsizing not just their homes, but their cars too. “Car running costs and lifestyle changes, such as switching careers or moving residences, are among the reasons households might consider downsizing one or more vehicles,” she says. “For example, a large SUV might work well if you’re living in a regional area, but a move to the city could make a hatchback or switching to an electric vehicle more economical to run, and easier to drive and park.” Switching to a smaller car can save up to $300 a month, RACV estimates, not to mention being much easier to park!
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.