'stupid' Tax Leads To Car Review

The Age

Thursday October 9, 2008

By Ian Porter

THE changes made to luxury car tax have already started to influence the design of premium cars, with Audi announcing plans to install smaller diesel engines in some of its models so they consume less than seven litres per 100 kilometres - and become exempt from the tax.

But while the exemption for efficient cars was welcomed by the company, Audi chief Joerg Hofmann was critical about what he sees as a discriminatory tax.

Audi has a wide range of advanced turbo-diesel engines and will be looking to use its newer, smaller units in some of its medium and large models, such as the A6 range.

"We will introduce new diesels on the A6, part of our new environmental program and as a result of the stupid luxury car tax decision," Mr Hofmann said in Sydney on the eve of the Australian International Motor Show.

The company already has diesels in every model range and earlier this year started launching a series of cars that have been tuned specifically to maximise fuel consumption.

The first of these was the A3 1.9 TDIe, which is rated at 4.5 litres per 100 kilometres with emissions of 119 grams of carbon dioxide a kilometre.

Initially, Audi planned only to use its big three-litre V6 turbo-diesel engine in the A6, Mr Hofmann said. "Since the legislation passed with the seven-litre exemption, we have had to look at our whole range again."

He said the company had two diesel engines, both four-cylinder units, which would both consume less than seven litres in the A6. "It was not the original plan because we were not focused very much on the diesel side for the A6. Now with the new legislation, why not bring in a four-cylinder turbo-diesel engine?"

Mr Hofmann said the exemption for cars that consume less than seven litres per 100 kilometres was the only good part of the tax and that Audi was already planning to release smaller engines in some of its models so that they were priced below the $75,000 threshold for fuel-efficient cars.

Under the new tax structure, cars that use less than seven litres per 100 kilometres and cost less than $75,000 will attract no tax. Cars that consume less than seven litres and cost up to $100,000 will attract tax only on the portion of the price above $75,000.

Mr Hofmann said Audi would be launching new versions of its A4 and TT models that use less than seven litres per 100 kilometres and that would attract no luxury car tax, as well as new versions of its A6 and A5 models that would attract reduced tax.

Mr Hofmann blamed the car tax for the 15% slump in sales of premium cars in the three months to September.

© 2008 The Age

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