Australians will be able to import a new car or motor cycle without the need to go through a local dealer from 2018.
But it must have comparable standards to Australia's, be a right-hand drive passenger vehicle, no more than 12 months old and have no more than 500km on the odometer.
More than 90 per cent of new vehicles were imported and within two years all cars will be imported once Ford, General Motors and Toyota cease local manufacture, the federal government said in a statement on Wednesday.
Of the world's right-hand drive countries, Japan and the United Kingdom now meet the Australian standard.
Other countries may be included upon reaching a comparable standard.
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"If a manufacturer chooses not to sell a particular model in Australia, a consumer may now have an option to source this model overseas," Major Projects Minister Paul Fletcher said.
The changes will improve the existing arrangements for importing exotic, rare, classic, collectible and special purpose vehicles.
A new rule will allow such a vehicle, which is at least 25 years old, to be imported under these arrangements.
The $12,000 special duty on imported used vehicles will be removed from 2018.
Labor has criticised the decision, citing concerns about jobs, safety and warranties.
Industry spokesman Kim Carr questioned what would happen with recalls or finding replacement cars.
He also questioned whether imported cars had the capacity to withstand the Australian heat.
"The government is proposing measures which they themselves say will not produce substantial reductions in price but expose consumers to substantial risk," he told reporters in Canberra.
Liberal Democrats senator David Leyonhjelm is more hesitant to discount the value of variety, given his wife's fussy taste in cars.
"My car is due for replacement this year and my wife doesn't like any of them at all," he told reporters.
While he welcomes the expansion of his narrow list of "crappy" cars to choose from, the senator would like to see older cars included in the mix.
"It is not true to suggest that a car that is two years old or 12 months old is a risk," he said.
