Drive.com
CAR buyers may soon see a welcome drop in prices on a wide range of European vehicles, thanks to an impending Free Trade Agreement (FTA) between Australia and the European Union.
Federal Trade Minister Don Farrell has confirmed that the deal is “now close” to finalisation, promising major changes for both new-car pricing and the Luxury Car Tax (LCT).
Under the proposed agreement, the 5 per cent import tariff currently applied to European-built vehicles would be removed.
This exemption does not extend to vehicles manufactured in Japan, China, Thailand, South Korea, or the United States, but for eligible European models, the potential savings could be significant.
Even more impactful could be the gradual scrapping of the Luxury Car Tax, which currently levies a 33 per cent tax on every dollar above set thresholds.
Popular European vehicles expected to benefit from the deal include the Mercedes-Benz GLC, GLA, Sprinter, and EQA, BMW models such as the X1, iX3, 2 Series, and 3 Series, Volkswagen’s Golf, T-Roc, Tiguan, and ID.4, and Audi’s Q3 and Q4 e-tron.
Not all European-brand vehicles will see a price drop. Models manufactured outside the EU, such as the BMW X3, Volkswagen Polo, and Amarok in South Africa, or the Volkswagen Transporter in Turkey, will remain subject to the existing tariffs. Meanwhile, vehicles already built in countries with existing Free Trade Agreements, including the United States, Mexico, China, and South Korea, are already exempt from import tariffs.
Electric vehicles stand to gain particularly strongly from the agreement. EU-built EVs priced below the LCT threshold would benefit from both the removal of import tariffs and the LCT wind-down.
