Canberra plug-in hybrid owner claims car maker is pocketing 'millions' in import-duty refunds

Harry Watson Smith is among the wave of Canberrans who have moved away from fossil fuels.

In December last year, he took delivery of a brand new Cupra Leon VZe plug-in hybrid, a car with a claimed pure electric range of 67 kilometres before the turbocharged petrol engine has to kick in.

The total price came to $63,490.

But Harry believes he – along with the thousands of other Australians who have purchased a plug-in hybrid Cupra since the Spanish car maker arrived here in 2022 – is entitled to a $3000 refund.

It comes down to a change in motor vehicle import tariffs a year ago.

Any good imported into Australia is assigned a ‘customs duty’ or ‘import tariff’ fee. For motor vehicles, this makes up 5 per cent of the recommended retail price (RRP).

In an effort to bring down the cost of EVs, the Federal Government slashed this fee from 1 July 2022 for “electric vehicles, plug-in hybrid vehicles and hydrogen fuel-cell vehicles”, provided they fell under the $84,916 luxury-car-tax (LCT) threshold for fuel-efficient vehicles.

Australia has already waived import tariffs for many countries – including China, Japan, Korea, Thailand and the US – under free trade agreements (FTAs). This means EVs from these countries are already exempt, so that’s BYD, Hyundai, MG, Mitsubishi, Nissan, Tesla and Toyota. But not Cupra.

Two months earlier, Cupra had announced a Leon VZe like Harry’s would cost from $59,990 ($62,990 ACT driveway). But when the local order books opened in July 2022, the price didn’t go down, but up by $500, blamed on a slightly larger 12-inch touchscreen.

At this point, a 5 per cent import tariff would have constituted $2,999 of the RRP, so you would think the price would drop to $57,490.

In fact, during an interview with ABC radio in November 2022, Cupra Australia brand director Ben Wilks flagged lower prices for their battery electric and plug-in hybrid cars thanks to the government’s move to slash the tariff.

“The key point for us is levelling the playing field. Many electric vehicles are sourced from China and other countries, but for us now – with the reduction of the import tariff from Europe … we’ve got an opportunity to bring electric vehicles from Europe.”

Buyers like Harry took this and ran with it.

“It was one of the incentives in the purchase of my car,” he says.

“I wrote it on the contract. I discussed it with them on the day that I took it. I took delivery and I have been following it like a dog chasing a bone since.”

Since then, however, his email correspondence with the Customs Division of the Australian Border Force (ABF) and Volkswagen Australia, which oversees Cupra Australia, has met with little luck.

The ABF told him it’s up to Cupra to decide whether or not to pass the refund on.

“How the importer factors customs duties, and any potential changes to the rate of customs duty, into the price they charge the consumer is determined by their internal business practices,” Trade and Tariff Policy director Alison Neil wrote in an email seen by Region.

And Cupra argued pricing for their cars already allowed for “the various duty, local costs, and taxes and fees applicable”.

But Harry sees the lack of a price change after July as proof Cupra has pocketed the refund, which he estimates to be in the millions.

“These importers have been refusing to get involved,” he says.

“Their refusal stems from the fact that claiming the refund requires minimal effort on their part, which they seem unwilling to undertake.”

In a statement to Region, the Australian Border Force confirmed only “eligible motor vehicles imported between 1 July and 22 July 2022 were entitled to a refund of the 5 per cent duty”, but what a business decides to do with this is not their concern.

“This is not a rebate scheme like solar panels,” the spokesperson said.

Volkswagen Australia reiterated model prices incorporate “best knowledge of the various local costs, taxes, duties and fees applicable”.

“We aim to get the best possible price in the Australian market while also guaranteeing availability of products that are in high demand globally,” Product and PR Communications manager Daniel DeGasperi told Region.

“There is no mechanism for a duty refund for customers on contracts already agreed and vehicles delivered.”

These responses are backed up by Australian Consumer Law, which doesn’t require businesses to pass on any cost savings from decreases to tariffs or duties in the case of a consumer who has purchased an imported vehicle for a specific amount.

Any right to a refund depends on the terms of the contract signed at the time of purchase.

Earlier this year, the price of the Leon VZe was also cut back to where it began (at $59,990, or $62,990 ACT driveaway) to bring it in line with the fully electric Born hatchback.

Unphased, Harry says he will continue to fight for the $3000 refund he believes he and many others are due.

“I am essentially motivated by truth, honesty and integrity, and if there’s money attached to it and it’s likely to get into my pocket, I am even more willing.”