Audi Australia says local buyers could see lower vehicle prices or better-equipped models if a proposed free trade agreement between Australia and the European Union is finalised, describing the potential outcome as a “huge benefit” for customers.
Matthew Dale, national product manager at Audi Australia, told Drive the brand is closely monitoring the progress of negotiations between Australia and the EU. The agreement could remove the current five per cent import tariff applied to vehicles built within the European Union.
Most Audi models sold in Australia are produced in EU countries including Germany, Hungary, Slovakia and Spain. Eliminating the tariff would therefore have a broad impact across the company’s lineup.
The only exception is the Audi Q5, the brand’s best-selling model in Australia, which is built in Mexico. That vehicle is already exempt from the tariff due to an existing free trade agreement.
In addition to the import duty, the potential deal could also lead to the removal of Australia’s Luxury Car Tax (LCT). The tax applies a 33 per cent levy to every dollar above a specified price threshold and has long been criticised by luxury car manufacturers.
Under current rules for the 2025–26 financial year, the LCT threshold sits at $80,567 for standard vehicles and $91,387 for fuel-efficient vehicles, including electric vehicles and plug-in hybrids with a combined fuel consumption rating of 3.5 litres per 100 kilometres or less.
According to Dale, many Audi models fall within the LCT bracket, meaning any policy change would directly affect the brand’s pricing strategy in Australia.
“Obviously, a lot of our range attracts LCT, so we’re keeping a close eye on the discussions and watching how things develop,” Dale said.
“If something changes, we will adapt accordingly. We don’t actively take sides in the discussion, but we’re prepared to pivot depending on the outcome.”
Dale noted that the removal of the tax would primarily benefit customers rather than manufacturers.
“It obviously benefits customers because the LCT is a customer tax. It doesn’t really benefit the manufacturer,” he said.
“For buyers, it would be a huge benefit. It would give us scope to enhance value, but ultimately the biggest impact would be seen in pricing.”
He added that if the tax were removed, consumers would likely see reductions in vehicle prices.
“At the end of the day, you would see price reductions. Because the LCT is something the customer pays, any change flows directly back to them,” Dale explained.
Audi Australia is also monitoring potential changes to the Fringe Benefits Tax (FBT) exemption for electric vehicles priced below the LCT threshold. The incentive is currently under review after the Federal Government underestimated the cost of the policy.
“That’s all we can really do because we’re not the decision maker,” Dale said. “As a business we just need to stay flexible and adjust if policy changes.”
At present, the Audi Q4 e-tron 45 qualifies for the FBT exemption because its price sits below the $91,387 LCT threshold for fuel-efficient vehicles.
If the free trade agreement proceeds and luxury car taxes are removed, Audi believes Australian consumers could see significant savings across much of the brand’s European-built lineup.
