The expected savings from the Free Trade Deal, due to come into force on January 15, mightn’t have the savings care buyers were hoping for.

Car buyers can expect to see savings between $250 and $1000, much less than the $7600 predicted by Andrew Robb, the federal Minister for Trade an Investment.

The lacklustre savings come as a result of the 5 per cent tariff being exised on the landed price of the car rather than the recommended retail price. This means that car manufacturers are still able to set their own recommended price on the showroom floor. And, as a Toyota spokesman said, “in some cases we’ve passed on more than the duty saving.”

The major Japanese car producers have shaved their prices ahead of the Free Trade Agreement. However, they have hinted that rather than passing on the full savings they will add features commensurate to the new prices. By keeping the prices close to their current state they hope to avoid damaging the resale value of cars both with the 5 per cent tariff.

The FTA with Korea came into being on December 15. The FTA with Japan will follow on January 15. Japanese manufacturers estimate the prices of 100,000 cars will fall as a result.

But buyers are told to beware. Some cars with Japanese and south Korean logos are actually made in other countries, such as Thailand or India and will not attract the reductions. The makes to look out for are Toyota Yaris, Prius and Corolla hatch. The Corolla sedan and HiLux will keep their prices as they are made in Thailand (which already has an FTA with Australia).

Mazda will drop prices on Mazda3, mazda6, CX-5 and CX-p models by around $700.

Most Hondas sold in Australia are already made in Thailand; therefore consumers can expect to see no changes in price.

Subaru says that some of its models will attract $500 price reductions/

However, the car industry has warned buyers that currency exchange rates affect car prices far more significantly than a measly 5% FTA.


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