Free trade deal good news for drivers

Australians may pay up to $2000 less for a new car under a free trade agreement with Japan.

Australian Automobile Association chief executive Andrew McKellar said that with one third of new vehicles sold in Australia coming from Japan, the free trade agreement secured on Monday would be good news for drivers.

"This is effectively a tax cut for motorists and should result in savings of between one and two thousand dollars," Mr McKellar said in a statement.

"This agreement will make the entire new car market more competitive and that's good for all consumers," he said.

It's a major coup for Prime Minister Tony Abbott, who wanted to finalise the deal as a matter of priority on his first visit to Japan.

Mr Abbott will travel to Seoul in the coming days to sign a free trade agreement struck with South Korea in December.