China to cut import duty on cars to just 15%

China has decided to reduce the import duty on cars to just 15%, down from the 25% that was in place over the past 10 years. The Ministry of Finance, China also announced a cut in import tariff on auto components. The revised rates will be applicable from July 1, 2018.

Auto components will be taxed at 6%, down from the earlier 10%. The move comes after the USA and China agreed to reduce the trade imbalance between them. At talks held in Washington last week, China said that it would work towards opening up the world's largest auto market to foreign investors.

For a start, the country has also removed the foreign investment cap for electric carmakers setting up business in China. Manufacturers like Tesla will be allowed to set up local companies with 100% ownership. Earlier this month, Tesla set up its subsidy in Shanghai, concentrating on the research and development of electric cars.

The reduced rates are expected to help carmakers like Tesla, Audi, Porsche and Mercedes-Benz and others, who have to complete with the local players. Following the development, Tesla China has announced that it will adjust prices of its cars accordingly, including those that were yet to be delivered to customers.

Source - South China Morning Post