Federal Budget Snapshot for Victorian automotive industry
Summary
The 2025-26 Federal Budget delivered on March 25, 2025, presents a mixed impact for Victoria's automotive industry.
While introducing measures that address some industry concerns, such as extending protections from Unfair Trading Practices to franchised dealers and funding for ACCC enforcement of the Franchising Code of Conduct, the Budget also maintains existing automotive tax structures.
Disappointingly, the Budget only provides modest support for businesses managing the transition to electric vehicles (EVs) and operational cost challenges.
The Budget maintains a focus on cost-of-living relief with personal income tax cuts scheduled for 2026-27 and extended energy rebates, with only targeted industry-specific measures for automotive businesses. With a $27.6 billion underlying cash deficit forecast for 2024-25, the Budget balances competing priorities, presenting both opportunities and considerations for Victorian automotive businesses in the coming fiscal year.
Key Impacts on the Victorian Automotive Industry
Positive Developments
Franchising Code of Conduct Oversight and Unfair Trading Protections
The Budget allocates $7.1 million over 2 years to strengthen ACCC enforcement of the Franchising Code of Conduct. It extends protections from Unfair Trading Practices and Unfair Contract Terms to all Automotive Franchised New Car and Truck Dealers, addressing power imbalances faced by Victorian dealerships and franchise repair businesses.
New Vehicle Efficiency Standards Shift
The change from point-of-entry to point-of-sale standards creates more equitable compliance responsibilities for Victorian automotive retailers. It prevents global manufacturers from dumping high-emissions vehicles onto local dealers.
Apprenticeship Support
A $77.8 million commitment extends the current interim Australian Apprenticeship Incentive System for 6 months, addressing critical talent gaps in the Victorian automotive sector, which continues to face skills shortages.
Small Business Training
The $2 million allocation for small business training may help Victorian automotive businesses address skills gaps and improve business management capabilities. We will await more details on this.
Vocational Education Protection
A $4.7 million commitment to the vocational educational training regulator (ASQA) to counter fraud protects the integrity of training essential to developing qualified automotive technicians.
Limitations and Concerns
Taxation Framework
Automotive Taxes Remain Unchanged with the continued imposition of the Luxury Car Tax (LCT) and Passenger Vehicle Tariff, with the government estimated to collect almost $1.55 billion this financial year. Industry bodies consider these taxes outdated, mainly because they were designed when Australia manufactured domestic vehicles. LCT often applies to more efficient vehicles and optional safety features, discouraging consumer uptake.
Energy Cost Considerations
The $150 rebate for small business energy bills is inadequate for energy-intensive automotive operations, particularly paint and panel workshops. Victorian automotive businesses will continue to face significant energy cost pressures without more substantial relief.
EV Transition Challenges
The Budget lacks direct subsidies or tax incentives for workshop equipment and tooling to service and repair electric vehicles. Victorian businesses face substantial capital costs to update facilities, with no targeted government support for this transition.
Tax Incentive Reductions
Non-renewal of the Fringe Benefits Tax exemption for plug-in hybrids potentially reduces sales incentives, which may impact Victorian dealerships specialising in these transitional vehicle technologies.
Small Business Support Gaps
Despite the $2 billion "targeted small business support" mentioned, no specific tax measures were announced as part of this policy. The extension of the small business instant asset write-off to June 2025 is still before Parliament, and no update was provided in this Budget.
Key Economic Indicators
Key economic indicators that will affect Victorian automotive businesses include:
- Projected nominal GDP growth of 4.25% in 2024-25, higher than previously forecast.
- Personal income tax cuts from July 2026, potentially increasing consumer disposable income.
- Extended energy bill relief ($150 per household/business) until December 2025.
The Budget is framed as a platform for the upcoming election, with spending measures dominated by personal income tax cuts estimated to cost $17.1 billion over three years from 2026-27.
Conclusion
The 2025-26 Federal Budget presents a mixed landscape for Victoria's automotive industry, balancing some meaningful protections through the Franchising Code enforcement and unfair trading practices safeguards with limited progress on automotive tax reform and technological transition support.
For Victorian automotive businesses, the expanded franchising protections and apprenticeship extension are welcome, though more comprehensive support for EV transition and operational cost pressures would strengthen the industry's position going forward.
VACC Advocacy and Government Engagement
The VACC and our national representative body, the Motor Trades Association of Australia (MTAA), will continue to advocate strongly on behalf of the Victorian automotive industry following this Budget announcement. We remain committed to ongoing government engagement at both state and federal levels to address the concerns highlighted in this analysis.
Our advocacy will focus particularly on reform of outdated automotive taxes, support for EV transition infrastructure in repair and service businesses, improved energy cost relief for automotive operations, and enhanced apprenticeship and vocational training investment.
VACC will provide members with regular updates on these advocacy efforts and opportunities to contribute to industry submissions in the lead-up to the federal election.
Members are encouraged to contact VACC with specific concerns about Budget impacts on their businesses to strengthen our collective voice in discussions with government representatives.
You can download the full VACC report here