The benefits of the upcoming free trade agreement (FTA) between Australia and the European Union (EU) remain unclear, say major automotive brands, who claim it is still too early to know exactly how it will impact local buyers.
Earlier this week, the Australian federal government announced its long-awaited free trade agreement with the EU after lengthy negotiations since 2018.
The final proposal, which must be ratified before its expected implementation in mid-to-late 2027, would scrap the current five percent tariff on all vehicles manufactured in the EU and sold here – potentially meaning an immediate price cut for buyers.
It also proposes changes to the Luxury Car Tax (LCT) for electric vehicles (EVs), with the threshold for battery-powered models raised from $91,387 to $120,000. However, the LCT remains unchanged at $80,567 for petrol, diesel and hybrid vehicles.
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So the free trade deal is expected to save buyers of EU-made vehicles thousands of dollars – and in the case of buyers of luxury electric vehicles from the continent, potentially even more than European-made hybrid, petrol and diesel cars.
Nevertheless, a number of European car brands have reported on it Daily Sparkz The direct impact of the agreement on showroom prices is not yet clear.
“We welcome the proposed update to the luxury car tax with a higher threshold for electric vehicles, as well as the planned removal of the five percent import tariffs as part of the Australia-Europe Free Trade Agreement negotiations,” said Vikram Pawah, CEO of BMW Group Australia Daily Sparkz.
“While we await further details, these are positive steps that will help make electric vehicles more accessible to customers.”
Mercedes-Benz Australia also said it viewed the announcement of the free trade agreement as a positive step.
“Mercedes-Benz supports free trade because it ensures prosperity, growth and innovation,” said a spokesman Daily Sparkz.
“We therefore welcome the agreement, which sends a clear signal in support of rules-based trade and advances the EU’s diversification efforts.”
Mercedes-Benz Australia added: “The move from five per cent to zero per cent can improve the price competitiveness of EU-made CBUs (Completely Built Units) in Australia, while increased cooperation on raw materials can improve EU access to Australian supplies.”
The benefits for Australian new car buyers are clear, but with the free trade agreement still 12 to 18 months away from coming into effect, the volatile global economy has dampened expectations about the extent of the potential benefits for local buyers of European cars.
There is also a risk that buyers will put off buying their next European-made vehicle until the free trade agreement comes into effect – an issue that brands will no doubt be discussing strategies to combat in boardrooms both locally and in Europe.
“It is too early to confirm what the announced changes to the free trade agreement will mean in practical terms for Porsche customers,” a Porsche Cars Australia spokesperson said Daily Sparkz.
“At this time there is no confirmed evidence of specific customer impacts.”
The company announced in Sydney, where Audi Australia is based Daily Sparkz It “welcomes the announcement of the proposed free trade agreement between Australia and the European Union and supports any initiatives that have the potential to deliver long-term benefits to Australian drivers.”
“We are currently reviewing the details of the agreement to understand what it may mean for our customers and what impact it will have. However, as we do not have a timeline or confirmed implementation period, we are unable to comment further. We will provide updates in due course as the implications for Audi customers in Australia become clearer.”
MORE: In Australia, tariffs on European cars have been eliminated, but the luxury car tax remains – with changes
