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According to auto news Autonews, BMW and Toyota are expected to further benefit when China promises to reduce auto import tariffs and further open up the Chinese auto market.
China is the world’s largest auto market, and foreign automakers hope to enter the Chinese market in a better and more competitive way. This call has been for decades. Now, foreign companies have entered the Chinese market with good news.
At the Boao Forum for Asia, Chinese President Xi Jinping said that China does not aim at pursuing a trade surplus and sincerely hopes to increase imports and promote current account balances. This year, China will reduce the import tariffs on automobiles by a considerable margin, while reducing the import tariffs on some other products, and strive to increase the import of products with special characteristics and advantages where the people’s needs are concentrated. Moreover, President Xi also emphasized that China plans to relax restrictions on foreign joint ventures and states that the government will introduce relevant policies as soon as possible.
Affected by this, Chinese domestic automakers Beiqi, BYD, and GAC have all experienced a decline in their prices. If China's current 25% automobile import tariff is reduced, the competitive advantage of foreign automakers will be even greater, with more foreign brands. Will invade the Chinese market and compete with local brands.
trade war
At present, China is in an atmosphere of "trade war" with the United States, the world's largest economy, and last week the Chinese government proposed to impose a 25% tariff on imported cars from the United States. In this context, during the Boao Forum for Asia, President Xi made a statement to the world to further open up the auto market.
High-end car brands will especially feel the benefits of tariff cuts because the production of high-end brands is rarely transferred to China. Among them, Toyota's Lexus will benefit even more, because Lexus is the only high-end brand that has not produced in China and has not declared production in China. Bloomberg analysts said: "This will be a blessing to the Chinese luxury car market." Audi's leader in sales of automobiles began producing cars in China in 1996. GM Cadillac opened a factory in Shanghai in 2016.
In 2017, China imported a total of 1.22 million vehicles, which accounted for about 4.2% of the total sales of 28.9 million for the whole year. At the same time, at the Boao Forum for Asia, President Xi reaffirmed China's commitment to open the auto market. During the two sessions, Premier Li Keqiang once stated that China will gradually reduce its auto import tariffs this year.
In addition to tariffs, when China requires overseas automakers to establish joint ventures with local automakers in China, the proportion of investment should not exceed 50%. When this policy was introduced in the 1990s, China hoped to gain technology transfer through cooperation with global auto giants such as Volkswagen and General Motors, and thus promote the development of China's automobile manufacturing industry.
Honda Motors welcomed China’s commitment to further open up the automotive market. Honda currently produces cars in China through two joint ventures. Peter Fleet, head of Ford’s Asian market, said that the initial signs were “inspiring.â€
Cui Dongshu, secretary-general of the National Passenger Vehicle Information Association, said that any reduction in tariffs will have a huge impact on Chinese domestic automakers. At the same time, the relaxation of the automobile joint venture’s regulations will also have a long-term impact on the Chinese auto industry.
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