[blackwasp]

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

Link to the Team-BHP News

[Stratosphere]

Seems like Trump's hardline diplomacy did the work. Removing the foreign investment cap is a major win for US companies.

I hope we do something like this soon to secure our economic needs.

[sri_tesla]

Below chart shows the major imported brands by volume in China. (source: Bloomberg). Tesla will be another major beneficiary of this tariff reduction. Last year (2017) revenue from China is $2 billion for Tesla. This tariff reduction along with allowing foreign car makers to completely own the manufacturing units in China will benefit Tesla to a great extent.

Also, Tesla just reduced the prices of its Model X (top end model) by $14000 after the reduction of import tariffs by China.

[Karthik_S]

I suppose it is wishful thinking to assume something similar will happen this side of the Brahmaputra.

I'll settle for a uniform tax regime with ease of movement within the country!

[volkman10]

Seems President Donald Trump, does a favor for BMW and Mercedes - Two of the biggest beneficiaries of this import duty cut.

the decision is certainly good news for German and Japanese automakers

estimates the duty cut would have boosted BMW's operating profit by about 13 percent last year, while Daimler would have enjoyed a 6 percent uplift

But since most big players have manufacturing units set up in China the duty cut comes with moderate reactions because of the massive investments they've already made in shared local production.

Source:

[GTO]

Quite shocked when I read the news. China isn't known for moves like these - they protect the local industry above all else (even in tech, Google, Facebook, Amazon & Uber are nothing in China). And thanks to years of regulation, China has incredible manufacturing capacity today. China was smart - they first insisted on Chinese-MNC partnerships, huge factories and now are lowering the import duty after everything is in place. From the same Autonews article:

Most indicated that they wouldn't make much use of the rule change because of the massive investments they've already made in shared local production.

Still, 15% is low, very low. China wouldn't want an 'Australia' to happen to them. While details are yet unclear, I am sure some class / size / volume restrictions will be in place.

Originally Posted by Karthik_S

I suppose it is wishful thinking to assume something similar will happen this side of the Brahmaputra.

Frankly, I support the steep import duties. If you want to be a part of our fascinating economy, start building cars here.

Originally Posted by volkman10

Seems President Donald Trump, does a favor for BMW and Mercedes - Two of the biggest beneficiaries of this import duty cut.

Tesla & Ford too.

[sri_tesla]

Originally Posted by GTO

Quite shocked when I read the news. China isn't known for moves like these - they protect the local industry above all else (even in tech, Google, Facebook, Amazon & Uber are nothing in China). And thanks to years of regulation, China has incredible manufacturing capacity today. China was smart - they first insisted on Chinese-MNC partnerships, huge factories and now are lowering the import duty after everything is in place.

This is true. Most of the companies already have huge factories in China. In 2017, only 4.2% cars are imported out of 28.9 million in 2017. Thats just 1.2 million out of 28.9 million cars (source: Bloomberg). This tariff reduction will not hurt them now.

[ajmat]

Originally Posted by GTO

Still, 15% is low, very low. China wouldn't want an 'Australia' to happen to them. While details are yet unclear, I am sure some class / size / volume restrictions will be in place.

.

The buyers of imported cars are usually in the cities. Nowadays, Beijing, Shanghai and some others are limiting car ownership, Singapore style. My guess is that this is to help boost sales in Tier 2 cities