THE import tariff on Japanese and South Korean cars will be completely removed from January 15 — bringing price cuts to almost half of all cars imported into Australia.
However, the industry has warned buyers not to expect massive savings — most likely between $ 250 and $ 1000 — because the 5 per cent tariff was on the landed cost of the car, not the recommended retail price.
The Federal Minister for Trade and Investment Andrew Robb claimed there will be savings of up to $ 7600 on some Toyotas as “an example of the real impact that families will see from these agreements … for Toyota’s biggest-selling models”.
But don’t expect its biggest-selling model, the Toyota Corolla, to suddenly be discounted from $ 20,000 to $ 12,400.
Toyota is yet to issue a revised price list and the $ 7600 saving is more than 5 per cent of its most expensive model, the $ 120,000 LandCruiser heavy-duty 4WD.
A Toyota spokesman said “in some cases we’ve passed on more than the duty saving”.
But they also say they will add equipment to future models — rather than pass-on the full cost saving — to avoid damaging the resale value of cars bought earlier, with the 5 per cent tariff included.
The Japanese Free Trade Agreement due to come into effect on January 15 follows the deal with South Korea that came into force on December 15.
The deals are estimated to impact about 460,000 cars this year; Toyota alone expects the changes will make about 100,000 of its cars cheaper.
“Traditionally Toyota would have implemented the price reductions at the same time as the cuts to import duty start to apply,” said Toyota Australia executive director of sales and marketing Tony Cramb.
“Instead, with the support of our dealers, Toyota has brought forward these price cuts to the start of the year,” said Mr Cramb, adding that three low-volume cars will soon gain extra equipment instead.
“For 2015 as a whole, the result will be lower prices for well over 100,000 Toyota vehicles, or more than half our annual sales in Australia.”
But some cars wearing Japanese and South Korean badges will not have any new savings because they are made in other countries such as Thailand (which signed Free Trade Agreements with Australia in 2005) and the USA (which signed Free Trade Agreements with Australia in 2010) or India (which has no Free Trade Agreement with Australia).
Price cuts are expected on the Japanese-made Toyota Yaris, Prius and Corolla hatch, among others. But prices will remain steady for the Corolla sedan and HiLux sourced from Thailand and the Kluger SUV sourced from the US because Australia already has Free Trade deals with those countries.
Mazda has trimmed prices on all Mazda3, Mazda6, CX-5 and CX-9 vehicles, from $ 268 to 963 on vehicles which range in price from $ 20,000 to $ 50,000. But its cheapest car, the Mazda2, and the BT-50 ute will not get price cuts as they come from Thailand.
Likewise most Hondas sold in Australia today come from Thailand.
Meanwhile Subaru cut prices of some of its models by between $ 500 and $ 1000.
The car industry has warned buyers that exchange rate fluctuations have a bigger impact on prices than the 5 per cent tariff.
“The Australian dollar has moved by 60 per cent over the past 10 years but car prices have remained relatively stable,” said an industry insider.
“Car makers ride the currency wave, plus you have the impact of the devalued Japanese Yen. That has a bigger impact on this than the removal of the tariff.”
South Korean car giant Hyundai says it will introduce savings or extra equipment but the currency gap between the Korean Won and the Japanese Yen will make it more difficult to introduce significant savings.
This reporter is on Twitter: @JoshuaDowling