Reduce Protection for Car Industry


Australia’s peak motoring body, the Australian Automobile Association (AAA), today claimed motorists will be worse off if the Federal Government reverses earlier decisions to progressively wind back protection for the Australian automotive industry by maintaining high tariffs and extending other assistance measures.

In its submission to the Review of the Australian Automotive Industry, AAA said the automotive industry is highly protected, enjoying long-standing tariffs and support through the Australian Competitiveness Investment Scheme (ACIS).

The AAA submission puts it at odds with calls by the Federal Chamber of Automotive Industries to maintain tariff protection and increase ACIS funding.

AAA’s Director, Research & Policy, John Metcalfe said tariffs on imported vehicles and industry assistance through ACIS should be reduced, as originally planned, in order to provide cheaper cars for Australian drivers and their families.

”Higher tariffs on imported vehicles increase the price of new cars, and indirectly used cars, and disadvantage Australian motorists,” Mr Metcalfe said.

“This assistance works against AAA’s objectives of promoting responsible, affordable and safe motoring and safeguarding and protecting the interests of Australian motorists.

“Assistance to the local industry, including last week’s Budget decision to increase the Luxury Car Tax from 25 per cent to 33 per cent, has worked against the promotion of cleaner and safer vehicles.  The anomaly of tariffs on 4WDs at 5 per cent, compared to tariffs of 10 per cent on imported passenger vehicles, has not helped either.

“ACIS funding of $7.2 billion to the industry over 15 years has not been well targeted — the Australian National Audit Office has been critical of the scheme, particularly its lack of transparency.  AAA believes there is a need to ensure that industry support is tied to improvements in safety and environmental outcomes.

“While we welcomed the announcement of the Green Car Challenge, in which the Government has promised to buy ‘green cars’ if local manufacturers produce them, we believe this should not be limited to Australian made cars only.

“Many green cars are already available now.  In fact, a recent study has shown that purchasing the ‘best in class’ vehicle in today's market would reduce emissions by an average of 25 per cent.”

AAA’s submission to the Review of the Automotive Industry can be downloaded at   The AAA recommendations to the Inquiry follow.


AAA Recommendations to the Review of the Automotive Industry

Recommendation 1

AAA recommends that the tariff reduction program announced in 2002 should continue, with tariffs on passenger motor vehicles and components being reduced to 5 per cent in 2010.

Recommendation 2

AAA recommends that the Luxury Car Tax be abolished.

Recommendation 3

It is recommended that:

  • The Government continue its planned gradual reduction in Australian Competitiveness Investment Scheme (ACIS) funding once tariffs are reduced to 5 per cent.
  • If it is deemed desirable that ACIS (or other grant funding) should be continued beyond 2015, the Review should report on the relative merits of alternative arrangements such as providing the industry, or individual firms, with a direct grant which is more transparent.
  • ACIS funding (or other grant funding) should be tied to specific safety and environmental outcomes. Reports showing performance against targeted objectives should be produced on an annual basis.

Recommendation 4

AAA recommends that consideration be given to mandating the labelling of the ANCAP star ratings on vehicles (locally manufactured and imports) sold in Australia. Where ANCAP tests have not been conducted for certain vehicles, this fact should be recorded on the label.

Recommendation 5

AAA recommends that the Government consider establishing a Safe Car Innovation Fund to promote safety in new vehicles and assist with funding of ANCAP.

Recommendation 6

AAA recommends that the Federal Government negotiate with industry a new target of national average carbon emissions for all new locally made light vehicles. The target should be ambitious and consistent with the Government’s targets for reductions in greenhouse gas emissions.

Recommendation 7

AAA recommends the adoption of a non-mandatory fuel economy target of 140 gCO2/km for all passenger cars, which is consistent with the FIA’s Make Cars Green declaration.

Recommendation 8

AAA recommends that:

  • The Government’s Green Car Challenge of purchasing value-for-money environmentally friendly vehicles for the Commonwealth car fleet should not be restricted to vehicles manufactured in Australia.
  • The Government should immediately set a revised and challenging target for its Commonwealth car fleet based on the Green Vehicles Guide and ensure that performance against target is reported on an annual basis.

Recommendation 9

AAA recommends that:

  • The Government should not dictate the type of low emission vehicles (such as hybrids, flexible fuel and diesel) eligible for funding from the Green Car Innovation Fund (GCIF).
  • Local manufacturers receiving funding from the GCIF should be required to report on the development of green car technology and production plans in an Annual Report.
  • Continued GCIF funding should be conditional on the achievement of solid commercial and environmental outcomes.



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