Automakers Cut Prices in Response to Oz Tax Hike

Australia’s controversial luxury-vehicle-tax threshold rose 2.1% at the July 1 start to the new tax year and manufacturers quickly moved to cut their prices as a result.

The tax threshold is indexed annually according to a factor determined by the federal Parliament. If it doesn’t act, it is indexed in line with the movement in the All Groups Consumer Price Index and this year it was raised 2.1%, or A$1,300 ($964) for the next 12 months.

Market leader Toyota reacted by reducing the recommended retail prices of its models affected by the new threshold for the Luxury Car Tax.

For the Kluger Grande, Prado VX and Kakadu, LandCruiser 200 and Tarago Ultima, Toyota adjusted the price of 15 variants, passing along savings of A$390 ($289) for all but one of the vehicles. The exception was the 2WD Toyota Kluger Grande, which now falls below the luxury- car-tax threshold and is reduced A$377 ($279).

“Passing on benefits resulting from the changes to the luxury-car-tax threshold is a natural step,” Toyota Sales and Marketing Executive Director Tony Cramb says in a statement.

The new pricing structure is effective from July 1, concurrent with the LCT threshold increase.

BMW Australia also passed on savings of A$390 applying to all affected models in its range.

Vehicles classified as fuel-efficient under the taxation system are unaffected by the indexation, with the limit remaining at A$75,375 ($55,860). This applies to vehicles with a fuel-consumption figure of 33.6 mpg (7.0 L/100 km) or less.

Audi Australia says it is passing on the A$390 savings, saying any reduction in the tax payable by its customers is a positive move.

“The concession isn’t a huge sum of money,” Audi Managing Director Andrew Doyle says in a statement. “However, we are not in favor of any tax that penalizes luxury vehicle owners any more than buyers of other luxury items. Therefore we are very pleased to pass along any form of LCT reduction to our customers.”