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Widespread price reductions with new Luxury Car Tax threshold, but not from BMW

The introduction of a new Luxury Car Tax threshold has meant widespread price reductions for new models.


However, BMW has chosen not to pass-on the savings, despite lower prices being offered by its competitors.

On 1 July 2020 – the beginning of the 2020/2021 Financial Year – the price at which the Luxury Car Tax (LCT) is applied to brand-new vehicles was increased from $67,525 to $68,740, in line with inflation.

LCT is calculated at 33 per cent on every dollar above the threshold, equating to a saving of roughly $401 for each vehicle.

That threshold rises to $77,565 for fuel efficient models, providing a saving of about $672.

While the cost savings were not always passed-on in their entirety, new-car buyers are still the beneficiaries among most popular brands.

Prices were reduced on models from Audi, Jaguar, Land Rover, Mercedes-Benz, and Porsche, as well as some Lexus vehicles, the Ford Mustang GT and R-Spec, and the Toyota Supra.

 

Drive

For Victorians, an additional 'super luxury duty' is applied above the LCT threshold, equating to 5.2 per cent up to $100,000, 7 per cent from $100,000 to $150,000, and 9 per cent for vehicles over $150,000.

BMW announced it would be raising prices across its model range in June 2020, with the 5 Series line-up following the trend in July 2020.

A statement issues to Drive, BMW said: "In respect to the Australian Taxation Office’s revised Luxury Car Tax threshold for the 2020/21 financial year, BMW integrated the savings from this change into its recent pricing revision for applicable models".

Despite year-to-date sales figures for BMW showing a 3.9 per cent decline compared to the first seven months of last year, in the month of July BMW recorded a 42.9 per cent drop in sales year-on-year.

Drive
Ben Zachariah

Ben Zachariah is an experienced writer and motoring journalist from Melbourne, having worked in the automotive industry for more than two decades. Ben began writing professionally more than 15 years ago and was previously an interstate truck driver. He completed his MBA in Finance in early 2021 and is considered an expert on classic car investment.

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