The start of the 2023-24 fiscal year has brought some noteworthy shifts in government policies, and if you’re in the market for a car, you’ll want to pay attention. Two big changes have caught our eye: the end of the increased Instant Asset Write-off provision and a hike in the luxury car tax (LCT) thresholds. This has sparked various reactions from car manufacturers in Australia, particularly in the form of Recommended Retail Price (RRP) adjustments. 

Feel like popular car models are getting out of reach? You might welcome the LCT changes, perhaps even see it as the government’s way of easing inflation pressures. 

In July, we saw the LCT thresholds rise by 5.2% to $89,332 for Fuel Efficient vehicles and 7.1% to $76,950 for Others. Here’s a quick look at how brands have moved their RRPs: 

Source: RedBook

 

But why did some well-loved brands increase, not decrease their RRPs? 

The answer varies by brand. Some chose to reduce RRPs or pass on LCT savings, while others opted to raise them. The reasons? They might be tied to foreign exchange rates or rising material costs, rather than new model releases or enhancements. 

Will these changes trickle down to the used car market? 

It’s not so simple. For some electric vehicles (EVs), like Tesla, a decrease might not have much short-term impact since demand is still high. On the other hand, don’t expect a rise in LDV used prices just because new car prices have increased. The good old laws of supply and demand are at play here. 

EVs are getting a special boost from government incentives like fringe benefit tax exemptions, thanks to the Electric Car Discount Bill, and LCT threshold concessions. It’s creating a price balance between non-EVs and EVs that we haven’t seen before. 

As new car supply speeds up, will we see more discounts, reduced transaction prices, or even the return of Special Offers? It looks like the market is shifting back to its pre-pandemic state, and carmakers’ strategies with RRPs are bound to stir both the new and used car markets.