Local car manufacturers will absorb the extra cost. The new tax only applies to the three Australian manufacturers - Ford, Holden and Toyota - but they say they intend to absorb the extra because they must stay price competitive with import brands.
The Carbon Tax could add as much as $30 million to the costs of local carmakers and component companies, according to figures compiled by the Federal Chamber of Automotive Industries.
This means something between $200 and $400 for the price of a locally-made Falcon, Territory, Commodore, Cruze or Camry. None of the brands is prepared to go into detail, but each is adamant that rising prices is out of the question in 2012.
"Competition is fierce, so the ability for local manufacturers to pass on an additional cost is obviously limited," says Emily Perry of Holden. "This is a competitive disadvantage for local makers."
Holden will not speculate about the exact impact of the Carbon Tax, but intends to stay profitable after last week announcing an $89.7 million profit for its operations in 2011. Toyota is not making an ironclad promise on prices but admits it is extremely unlikely.
"We envisage that the cost of the carbon tax borne by Toyota Australia will not be passed on to customers," says spokesman Mike Breen. "Given the competitive and price-sensitive nature of the Australian market, we would find it very difficult to pass these costs on, especially when most vehicles imported to Australia come from countries that do not impose a carbon tax."
But Ford is emphatic. "There won't be a price increase that is directly attributable to the carbon tax. Critically in the light and small car segments, prices are driven by competitive forces, not one single event or tax," says Neil McDonald of Ford. The situation is similar to the introduction of the Goods and Services Tax, which was preceded by speculation about major price increases across the motoring landscape.
But most of the impact from the GST was absorbed by car companies and there was little change to showroom stickers and that situation has stayed the same until today, when prices are at a historic low - in terms of value - thanks to the strength of the Australian dollar and competition between the 50-plus car brands now selling down under.
The Carbon Tax also worries the major importers, led by Mazda, but they also forecast a no-change situation in showrooms. "We will not have a clear picture of what, if any, cost pressures the carbon tax may put on our business until it is implemented," says Steve MacIver of Mazda.
"However, in general, any time our business is put under cost pressure such as exchange-rate movements, competitor actions or the like, we balance our costs against our competitive position in the market. Ultimately it's our buyers who determine the price we can charge for our products."
