The Federal Chamber of Automotive Industries notes the signing of the Australia-European Union Free Trade Agreement, which will remove the five per cent import tariff on vehicles and see minor changes to the Luxury Car Tax.
FCAI chief executive Tony Weber said the tariff outcome was welcome and would make European sourced vehicles more affordable.
The Government has also announced an increase in the Luxury Car Tax threshold for zero emission vehicles to $120,000.
“The removal of the tariff is a positive outcome for Australian consumers and brings European vehicles in line with those imported from other major markets such as China, Japan, Korea and Thailand,” Mr Weber said.
“The change to the Luxury Car Tax is incremental and leaves in place an outdated measure that no longer reflects the structure of the Australian automotive market.
“Luxury car taxes were first introduced in Australia nearly 40 years ago to protect a domestic manufacturing industry which no longer exists. It serves no clear purpose other than raising revenue and continues to impose unnecessary costs on consumers.”
The Luxury Car Tax currently applies a 33 per cent tax to the value of a vehicle above a set threshold, which in 2025-26 is $80,567, or $91,387 for fuel-efficient vehicles. A $100,000 vehicle can attract around $7,000 in LCT.
Mr Weber said the Luxury Car Tax discourages the uptake of vehicles with advanced safety and low emissions technologies.