Mazda kicks off tariff-led price cuts

Mazda RX-8

An end-of-year buying frenzy is on the cards as companies prepare to pass on the scheduled reduction in import duties.

Australian car buyers could be in for an end-of-year bonanza as nervous car makers prematurely pass on an impending cut in import duties to prop up the fragile recovery in the new-car market.

Australia's top-selling import-only brand, Mazda, has already signalled its intention, passing on the tariff cut more than two months ahead of time.

The drop in import tariff on passenger cars from 10 per cent to 5 per cent, due on January 1, equates to a discount of about 3 per cent on the car maker's list price.

Mazda has dropped the price of its most popular car, the Mazda3, by about $930 and the price of its RX-8 sports car by more than $2000.

Luxury car buyers will feel the biggest benefit, though, with the price of a Porsche Carrera S set to drop by as much as $8000 if the manufacturer passes on the tariff reduction in full.

BMW is offering substantial discounts at the moment to safeguard against buyers holding off their purchase decision in anticipation of a January price cut.

The company has a $4000 “Efficient Dynamics” credit on all its vehicles between now and November 30, while rival Audi is also running a price promotion.

While neither manufacturer admits the reductions are related to the tariff situation, one industry source said there was a connection. “People might start asking the question about a January price reduction and these discounts are designed to make sure there's no incentive to wait,” he said.

The tariff drop won't directly affect all brands and models, as a growing number of cars already attract no tariff because they are imported from Thailand, which has a free trade agreement with Australia. Most of Honda's passenger car range is sourced from Thailand, while a number of leading one-tonne utes and vans also hail from there.

Cars from the US, such as BMW's X5 and Chrysler-Jeep-Dodge products also attract no tariff, although all brands will be affected if their competitors pass on the reduction.

Four-wheel-drive buyers won't get any benefit from the change, because 4WDs already attract a lower 5 per cent tariff due to a government ruling that treats them as commercial vehicles, not passenger cars.

The regulation change could, however, bring a flood of new soft-roaders on to the market, with some manufacturers looking at bring in front-wheel-drive versions of popular soft-roaders as a result of the tariff cut.

The cut will remove an anomaly in the current tariff regime, where two-wheel-drive versions of the same vehicle have attracted twice the tariff of the 4WD versions. Toyota's popular RAV4 compact soft-roader is one vehicle tipped to get a front-wheel-drive version early next year as a result of the change. Already this year, Nissan has brought in a front-wheel-drive version of its Dualis soft-roader in anticipation of the reduction.