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Tariff Cuts

The Government has made big publicity mileage out of the just – imposed tariff cuts for new vehicles effective from January 1st 2010.

But is it really such big news?

We don’t think so, and let’s explain why.

The tariff cuts only apply to imported vehicles, and the reduction is from a 10 percent impost down to 5 percent.

So in the first place, locally produced Holdens, Fords and Toyotas miss out and you can also disregard four wheel drives as they are already on the lower tariff rate. Plus you can forget cars made in Thailand, too, as they already have a free trade agreement with Australia. Cars from the USA, such as BMW X5, X6 and Chrysler/ Jeep/ Dodge are also exempt for the same reason.

So what’s left and who is doing what?

We need to look at two wheel drive cars built in Europe, parts of Asia and South Africa, and that’s still a substantial part of the market. Some makers are doing nothing at all, some are adding value instead of price cuts and a few are passing the full savings on to the public. There are even quite a few who are sitting on the fence waiting to see what their competitors are up to.

Here’s an early February round up of who is doing what.

Mazda really set the ball rolling a few months ago when they announced a price attack in anticipation of the tariff cuts as a marketing tool, reducing some retail prices more than two months ahead of time. Porsche, BMW, Mercedes are all using aggressive pricing tactics to encourage buyers before the actual rate reduction is triggered, so that when it does filter through to retail sales it will hardly be noticeable .Peugeot have announced some very aggressive price cuts of up to $2500 due to a combination of exchange rate improvements and the tariff cuts.

Honda have also announced price cuts (even though much of their Australian range is made in Thailand).

Kia, Lexus, Maserati and some Toyota models have also reduced their prices.Toyota have chosen to equip their best selling Corolla, however, with extra specs like stability control and Bluetooth instead of price reductions.


Frankly we think it’s going to be pretty much ‘business as usual,’ but at marginally lower prices or better specifications supplied as standard equipment in some instances. Those imports that are eligible for the tariff cut could mean a sticker price reduction of around 3 percent, but imports are already getting help from the stronger Aussie dollar, and that’s putting competitive pressure on local products. Government incentives have stopped, so again they’ll all be fighting a little bit harder for your business.

So there will be good deals, there won’t be many price increases, and you, the car buyer should reap some benefits.