[Tariff Impact] China's auto imports plunge to historical low in June

[TaiShang]

China's auto imports plunge to historical low in June

By Chen Liubing | chinadaily.com.cn | Updated: 2018-08-07 13:36

China's automobile imports tumbled 87.1 percent to 15,000 units in June, according to statistics from the China Automobile Dealers Association. The country imported 452,000 automobiles through June, dropping 22.1 percent on a yearly basis.

"Such a decline is rare historically," said Wang Cun, director of the import car committee at CADA.

Wang attributed the slump to the latest import tariff policy changes in China, reported finance.ifeng.com.

In addition, the country witnessed a sales slump of imported vehicles in the same month, with sales falling 21.2 percent to 63,000 units in June and dropping 9.8 percent to 394,000 units during the January to June period.

China started cutting import tariffs on vehicles and auto parts on July 1, thus potential customers were holding money in June for a better price after July. As the country started to add a 25 percent additional import tariff to vehicles made in the United States on July 6, certain US brands saw a sales increase in June compared with the previous month, Wang said.

Foreign brands except Mitsubishi, whose sales stem mainly from parallel import, posted weak sales in June, with Land Rover, Ford, Volvo and BMW the hardest hit marques.

In terms of models, SUV and MPV models experienced the toughest blow in June, with sales descending 29.1 and 42.3 percent respectively.

It is worth mentioning parallel imports also experienced a slump of 24 percent to 59,500 units in the first half of the year, according to a report from China Economic Net.

"Parallel import has been a strong driving force for the country's automobile imports in the past three years," Wang said, "and June's decline was due to trader risk control facing import tariff reduction."

When talking about tariff policies' effects on the whole year, Wang said under the shadow of China-US trade tensions, 80 percent of import models would enjoy 15 percent import tariffs in the second half of the year, while the other 20 percent would be taxed at 40 percent.

For example, automakers with plants only built in the United States would transfer tariff pressure onto customers, inevitably reducing product competitiveness. Those enterprises with multiple plants worldwide, such as Mercedes-Benz and BMW, may witness slight price increases.

"The brand structure of imported vehicles in China may witness obvious changes," the director said.

http://www.chinadaily.com.cn/a/201808/07/WS5b692fe3a3100d951b8c9112.html

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This happens while auto sales in China keeps increasing.

There are two likely reasons:

1. Tariffs on foreign auto-parts made imported cars more expensive.

2. Domestic brands have begun to eat away from foreign sedan segment.

@Kai Liu

 

[Bussard Ramjet]

This happens while auto sales in China keeps increasing.

There are two likely reasons:

1. Tariffs on foreign auto-parts made imported cars more expensive.

2. Domestic brands have begun to eat away from foreign sedan segment.

@Kai Liu

Did you even read the article?

This is because there is an import tax decrease from July 1. Import tax has been cut from 25% to 15%.

So obviously, everyone is delaying their purchase and imports in June, so that they can take the advantage in July.

It is literally mentioned in the piece!

Also, the tariffs have been CUT, not raised!

 

[Figaro]

Did you even read the article?

This is because there is an import tax decrease from July 1. Import tax has been cut from 25% to 15%.

So obviously, everyone is delaying their purchase and imports in June, so that they can take the advantage in July.

It is literally mentioned in the piece!

Also, the tariffs have been CUT, not raised!

Yes, you do raise a good point. The import tariff percentage for foreign cars (I'm not sure about American since there's a trade war) has been cut and domestic EV subsidies have eased quite substantially in recent months ... but point 2 raised by TaiShang is still valid. Domestic car-makers (mostly in the EV sector) has seen very sharp growth in recent years ... if you go to any Chinese street, you'll definitely see some Chinese electric sedans or electric buses.

 

[TaiShang]

Yes, you do raise a good point. The import tariff percentage for foreign cars (I'm not sure about American since there's a trade war) has been cut and domestic EV subsidies have eased quite substantially in recent months ... but point 2 raised by TaiShang is still valid. Domestic car-makers (mostly in the EV sector) has seen very sharp growth in recent years ... if you go to any Chinese street, you'll definitely see some Chinese electric sedans or electric buses.

Tariffs increased for US auto-part imports while decreased for other makers. I believe the decrease in imports can be partly explained by the decrease in imports from the US (for example, as far as I know, Cadillac is not made in China, but imported).

 

[Kai Liu]

Tariffs increased for US auto-part imports while decreased for other makers. I believe the decrease in imports can be partly explained by the decrease in imports from the US (for example, as far as I know, Cadillac is not made in China, but imported).

It is good for domestic brands to grab more shares. Eventually, the imported cars or foreign brand cars will become insignificant and negligible.