Volvo to absorb LCT increase

Volvo has moved quickly to counter potential customer fallout from the Luxury Car Tax (LCT) hike. The Australia arm of the company announced this afternoon it would absorb any retrospectively increased LCT charges on new cars purchased from July 1 through to the expected review date of the legislation by Senate committee (more here) in late August.

Via a brief written statement issued this afternoon, Volvo Cars Australia boss, Alan Desselss said: "The proposed tax increase has caused much confusion within the marketplace and doesn't give the industry enough time to prepare for the changes."

On instructions from Treasury, the Australian Tax Office (ATO) has recommended to dealers -- through the Federal Chamber of Automotive Industries (FCAI) and the dealers' respective distribution channels -- that LCT be calculated at the new (higher) rate. Volvo asserts collecting or recovering this 'maybe' tax is unworkable in a retail environment.

"Customers should not be expected to pay for a tax increase that may never come into effect, so there will be a joint initiative between Volvo Car Australia and its dealer network to absorb the proposed cost until the tax increase is legislated, or further clarification is provided."

Volvo spokesperson Laurissa Mirabelli told the Carsales Network, the move could cost the company "a significant amount".

"Given the government has launched into this with no consultation, there are many grey areas. Our dealers are affected and our customers are affected.

"We're not going to say how much [it will cost us] on the record, but the proposed [LCT] increase affects most cars across our range. It could hit up to 300 new Volvos per month," she said.

According to Mirabelli, other prestige and near-prestige marques are likely to follow Volvo's lead.

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