A new free trade agreement between the European Union and Australia will remove import tariffs on European-built vehicles, potentially reducing costs across the Australian market.
The deal eliminates the current five per cent tariff applied to imported vehicles, with more than 100 models expected to be affected, including the Volkswagen Golf, Audi Q3 and Mercedes-Benz GLC. It also applies to vehicles manufactured in Europe by non-European brands, such as the Hyundai i30 N.
Savings and flow-on effects
While the removal of tariffs lowers import costs, manufacturers will decide whether to pass those savings to consumers or retain them within pricing strategies.
The agreement also removes tariffs on automotive parts, which could reduce servicing and maintenance costs over time, with 97.6 per cent of EU exports to Australia becoming duty-free.
In addition, Australia will accept EU type-approval certifications for many vehicles, reducing the need for duplicate testing and lowering compliance costs for manufacturers entering the market.
Broader policy changes
The deal also includes changes to the Luxury Car Tax for electric vehicles, increasing the threshold from $91,387 to $120,000 and allowing more EVs to avoid the tax.
Prime Minister Anthony Albanese said the agreement would improve affordability and expand consumer choice.
“This benefits Australian consumers and companies too, with greater choice in goods and services at lower prices,” he said.
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