"The political agreement in principle to conclude a free trade agreement between the EU and Australia is another important positive signal for Europe as a business location and especially for the German automotive industry. The agreement has the potential to mutually promote growth, prosperity, and employment and lays the foundation for further diversification of trade relations. In times of increasing isolationism and protectionism, the agreement sends a powerful signal for fair and rules-based trade.

The EU-Australia agreement opens up significant opportunities for the European automotive industry. In 2025, Germany exported automotive goods worth €2.3bn to Australia. The anticipated elimination of Australian import tariffs, currently at 5%, on the majority of automotive product groups will provide a crucial boost to bilateral trade. It's clear: Germany is an export nation. Approximately 70% of all jobs in our sector are export-driven. This export strength is further underscored by the fact that 77% of all electric passenger cars (BEVs and PHEVs) produced in Germany are exported—also to Australia. There, the share of electric vehicles in the passenger car market was around 15% in 2025 and is rising. German car manufacturers are already making a disproportionately large contribution to the ramp-up of electromobility in Australia. It can be assumed that a successful conclusion of the EU-Australia agreement will further support this momentum.

From the perspective of the German automotive industry, the adjustment of Australia's luxury car tax is of particular importance. The current 33% luxury tax on all private cars with a purchase price of approximately €45,500 or more disproportionately affects the German automotive industry. The planned increase in the threshold for electric cars to the equivalent of around €72,300 is positive, but not yet far-reaching enough. A swift abolition of the luxury tax could help to lower consumer prices, support Australia's transition to climate-neutral mobility, and create a level playing field for all market participants.

The planned intensified cooperation in the area of raw materials is a positive development, particularly the improved access to Australian raw materials. Australia is among the world's leading producers of lithium, bauxite, manganese, rare earth elements, cobalt, and nickel—all important components for the production of battery-electric vehicles.

Furthermore, we welcome the fact that the free trade agreement aims to reduce further non-tariff trade barriers in the area of type approval. For example, the Australian side has pledged to recognize EU type approvals for various vehicle groups. This avoids lengthy approval procedures and duplicate testing that previously slowed down the market launch of new vehicle models.

It should be emphasized that the positive effects of the agreement extend far beyond Germany. It brings benefits for the entire European Union. The German automotive industry is closely integrated into European production and supply chains. Therefore, increased demand from Australia not only strengthens Germany's position but also promotes production, trade, and employment along the entire European value chain.

In general, Germany and the EU must remain staunch advocates of free, fair, and rules-based global trade. Especially in times of increasing protectionism and geopolitical tensions, it is crucial to seize the momentum and strengthen existing and new alliances for open markets. The EU is therefore called upon to advance trade agreements much more quickly and pragmatically than in the past. Economic strength, cooperation, and new alliances are essential for the EU to maintain its role on the global stage and to defend and assert its own interests."

 

Data for editorial use (2025)

• Production by German manufacturers in Australia: none
• Car exports from Germany: 44,200 units (21% of which are electric). For context: Australia thus ranks ahead of Portugal and behind Norway in terms of export markets.
• Export value of automotive goods: 2.3bn Euro
   Cars 1.6bn
   Commercial Vehicles 0.4bn
   Parts 0.2bn
• New Car Registrations:
   total: 0.9mn, German market share 12%
   of which electric: 0.16mn, German market share 16%

Sources: VDA (Exports); S&P Global Mobility (Australian Market)