GOVERNMENT RESPONDS POSITIVELY TO MOTOR VEHICLE INDUSTRY CONCERNS

In response to a unanimous request from the motor vehicle industry, motor vehicle tariffs, currently at 22.5 percent, will be totally removed at midnight tonight.

About $300 million was collected in car tariffs in 1997. The motor vehicle tariff decision applies to all passenger and light commercial vehicles, excluding motor homes and ambulances.

"This announcement means savings from tariff reductions for New Zealand families and businesses almost immediately and it will remove uncertainty from the car market. Cars will be cheaper than they otherwise would have been," Mr Luxton said.

The announcement was a positive response to industry concerns to address the current state of the motor vehicle market he said. "It will remove a major tariff cost impost and contribute to lowering transportation costs across the economy, thus improving our international competitiveness. "Last year the Coalition Government announced that car tariffs would be removed on 1 December 2000, or sooner if the assembly industry closed.

Since then the remaining four motor vehicle assemblers have all decided that local production will cease before the end of 1998. "It is important to remove the remaining tariff to help get the new and used vehicle market moving again as soon as possible. The motor vehicle market involves a large number of people including assembly, component manufacturers, dealerships, leasing and finance companies," Mr Luxton said.

To assist the transition the Government has agreed to a $10.125 million one off payment for the four local motor vehicle assemblers. This will mean that they will be able to continue to produce vehicles in New Zealand until around the time of their already announced closure dates.

"This assistance will enable the industry to sell their locally produced vehicles in the now duty free vehicle market. It will also assist the component industry by providing greater market certainty and improved sales in the period up to the closure of the assembly industry," said Mr Luxton.

The Government has confirmed that a duty refund will be available on eligible passenger and light commercial vehicles imported on or after 14 February 1998 which remain unsold as at midnight tonight. The duty refund is estimated to cost the Government about $30 million.

The details of the duty refund will be available from both the Ministry of Commerce and the New Zealand Customs Service. It is intended to help dealers sell existing stock at reduced prices.