Fuel economy in Australia

Around 1 million light-duty vehicles (LDVs) were sold in Australia in 2019, a slight dip compared with 2017 and 2018. The average fuel consumption of new LDVs in 2019 was 8.3 litres of gasoline equivalent (Lge/ 100 km) in Australia. Similar to the United States and Canada, the LDV market in Australia is dominated by SUVs/pick-up trucks, with sales shares more than doubling since 2005 and reaching 66% of the market in 2019. Growing shares of SUVs/pick-up trucks has coincided with a 10% increase in the average weight of LDVs between 2005 and 2019. At 1 703 kg in 2019, the average weight of LDVs in Australia is 15% higher than the global average.

The fuel economy of all LDV segments has improved since 2005. Notably, fuel consumption decreased on average by 3.6% per year between 2015 and 2017 for small SUVs/pick-up trucks, followed by 2.7% for medium cars, and 2.5% for large SUVs/pick-up trucks. However, improvements have since stalled for small SUVs/pick-up trucks and medium cars, with fuel consumption increasing on average by 0.6% per year and 1.4%, repsectively between 2017 and 2019. Overall, average fuel consumption of LDVs in Australia has improved since 2005, though the rate of improvements has slowed to 0.3% per year since 2017.

In contrast to most major LDV markets, the sales share of diesel vehicles has expanded considerably since 2005 in Australia. Diesel accounted for 32% of LDV sales in 2019, which is far higher than the global average. Most of the growth in diesel shares has occured in the large and small SUV/pick-up truck segement. Between 2017 and 2019, the the sales share of hybrids increased by 2%, though plug-in and electric vehicles each only accounted for 0.1% of LDV sales in 2019.

Unlike most OECD countries, Australia does not have mandatory fuel economy standards, although voluntary standrads have been in place since 1978. In 2020, the Federal Chamber of Automotive Industries (FCAI) announced a new industry-led CO₂ emissions standard, that aims to reduce CO₂ emissions on average by 4% per year for passenger cars and light SUVs. All new light-duty vehicles sold in Australia are required to display a a label on the front windscreen that indicates the vehicle’s fuel consumption and CO₂ emissions.

Australia’s minimum emission standard for new LDVs is ADR 79/04, which is based on the Euro 5 standards and is codified under the Australian Design Rules. Such standards do not cover CO₂ emissions. Currently, the Ministerial Forum on Vehicle Emissions is reviewing whether Australia should adopt Euro 6 standards for LDVs. In the absence of federal incentives or policies to encourage the uptake of electric vehicles, some states are encouraging adoption through purchase rebates. However, the state of Victora recently imposed a distance-based tax on electric and hybrid vehicles.