Walking through Central or Tsim Sha Tsui, it is common to see many high‑end cars despite Hong Kong being one of the most expensive places in the world to own a vehicle. For most residents and expats, the listed price of a car is only the starting point of a long list of costs. abcarhk

Direct Answer: The “Price” of Mobility

Cars are expensive in Hong Kong mainly because of the First Registration Tax (FRT), which can increase the pre‑tax vehicle price by roughly 46% to over 130% under today’s progressive system. On top of that, there are high annual licence fees, very expensive parking, world‑leading fuel prices, and policy choices that deliberately discourage private car ownership in favour of public transport. classicsracer

Part 1: The Core Financial Barriers (How the Costs Add Up)

Step 1: Calculate the First Registration Tax (FRT)

The biggest single cost component for a new private car is the First Registration Tax, which is applied on a progressive scale to the car’s taxable value (CIF price plus certain charges). Since 24 February 2021, the standard FRT bands for private cars are: budget.gov

• On the first HK$150,000: 46%. td.gov
• On the next HK$150,000: 86%. budget.gov
• On the next HK$200,000: 115%. td.gov
• On the remainder above HK$500,000: 132%. budget.gov

For a private car with a taxable value of HK$1,000,000, total FRT can easily exceed HK$800,000, so the total “on‑the‑road” cost becomes well above the original car price. This is why performance and luxury models often end up costing several million Hong Kong dollars, even when their overseas prices are a fraction of that amount. abcarhk

Step 2: Factor in Import and Logistics Costs

Hong Kong has no domestic car manufacturing, so every car is imported, and the vehicle price already reflects shipping, insurance, and distribution margins. As a dense, high‑rent city, costs for port handling, storage, showroom space, and staffing are also high, and these expenses are ultimately built into the retail price that FRT is then calculated on. abcarhk

Step 3: Account for Annual Licensing and Insurance

The cost of owning a car continues every year through licence fees and insurance. Official fee tables show annual vehicle licence fees for private cars rising by engine capacity band, with several thousand Hong Kong dollars difference per year between the smallest and largest engines. Mandatory third‑party insurance and optional comprehensive cover are priced to reflect dense urban traffic and the high value of many vehicles on the road, keeping premiums relatively high compared with many other markets. 1823.gov

Part 2: Environmental and Regulatory Drivers

Step 4: Strict Emission Standards

Hong Kong aligns its emission standards for newly registered vehicles with advanced international norms, broadly following Euro VI–type requirements. This effectively limits the market to newer and cleaner models and restricts the import of older, higher‑emission used vehicles that might be cheap elsewhere but would not meet local standards. abcarhk

Step 5: Government Policy and Public Transport Preference

High car ownership costs reflect explicit policy choices: the government relies on a dense, high‑capacity rail and bus network and deliberately discourages private car growth to manage congestion and pollution. Measures include high FRT, relatively high licence fees, limited road expansion, and priority investment in public transport and green transport (including electric vehicles) rather than private road infrastructure. epd.gov

Part 3: The “Hidden” Costs of Ownership

Step 6: The Parking Premium

Parking is one of the most expensive aspects of car ownership because of extreme land scarcity and high property prices. In popular districts or modern residential estates, individual parking spaces have been sold for well over HK$1 million, and monthly rentals in prime commercial areas can rival the rent of a small flat in less central locations. abcarhk

Step 7: Fuel and Maintenance

Hong Kong consistently ranks as the most expensive place in the world for petrol, with premium gasoline prices in early 2025 reported at around USD 3.3–3.6 per litre, the highest globally. There is no local refinery, so fuel is imported and subject to various levies and margins, and combined with the city’s focus on higher‑end service centres, regular maintenance and repair work at authorised dealers tends to be priced at a premium level. statista

Summary Advice for Expats and New Buyers

For anyone considering buying a car in Hong Kong, keeping the total cost of ownership in mind is essential, not just the showroom price. budget.gov

1. Buy pre‑owned

   • FRT is generally paid once on first registration; buying an existing local used car means the original buyer has already absorbed that tax, so your effective entry cost is lower relative to a new import. abcarhk
   • Depreciation on many models is steep in the first few years, so buying a car that is a few years old can significantly reduce your upfront outlay. abcarhk

2. Go electric under schemes

   • Hong Kong offers FRT concessions for electric vehicles (EVs), and the government has periodically extended concession schemes and related caps to encourage adoption. cnsd.gov
   • Under the current arrangement for electric private cars, there is a basic FRT concession cap and a higher cap for eligible owners under the “One‑for‑One Replacement” Scheme, both of which are time‑limited and subject to adjustment, so buyers should check the latest Transport Department and Environmental Protection Department information. td.gov

3. Think small and efficient

   • Smaller‑engine or lighter vehicles fall into lower annual licence fee bands, and typically have lower fuel consumption and sometimes lower insurance costs. classicsracer
   • Compact vehicles are easier to park in tight spaces and in some cases allow you to rent smaller, slightly cheaper parking slots, which materially affects ongoing monthly costs. abcarhk

Resources

• Hong Kong Government Budget and Transport Department documents for First Registration Tax tables and adjustments. budget.gov
• Transport Department and Environmental Protection Department pages on FRT concessions for electric vehicles and the “One‑for‑One Replacement” Scheme. epd.gov
• Publicly available vehicle licence fee tables and examples of current private‑car licence scales. 1823.gov
• Recent rankings and statistics of global gasoline prices showing Hong Kong as the most expensive market. tradingeconomics