China mulling duty cuts on imported cars by about half

BEIJING/SHANGHAI: China is considering cutting the import duty on passenger cars by about half as part of the country’s plan to further open up the automobile market, Bloomberg News has reported, citing people familiar with the matter.

China’s cabinet is weighing proposals to reduce the levy on imported cars to 10 per cent or 15 per cent from the current 25 per cent, according to Bloomberg. An announcement on the decision could be made as soon as next month, it added.

China pledged earlier this month to open up its auto market, the world’s largest, announcing a timeline to remove long-standing caps on foreign ownership of automotive ventures and saying

A major reduction in tariffs could prompt overseas carmakers, especially luxury brand names, to import more cars made overseas into the Chinese market.

it would cut tariffs on imported cars soon.

China’s State Council did not immediately respond to Reuters’ phoned and faxed requests for comment.

The high tariff - versus a 2.5 per cent US levy - has been a focus of US President Donald Trump’s administration amid a simmering trade standoff between Washington and Beijing. Trump has said the 25 per cent tariff amounted to “stupid trade”.

A major reduction in tariffs could prompt overseas carmakers, especially luxury brand names, to import more cars made overseas into the Chinese market, boosting their competitiveness by helping close a price gap on local rivals.

China’s main auto body said earlier this month a reduction to a five per cent import tariff could knock around one-fifth off the domestic industry’s profits, though it did not expect the tariff cut to be that severe.

Meanwhile, German luxury carmaker BMW expects the pace of growth of its China sales to almost halve this year, the firm’s chief executive has indicated, amid a broader slowdown in the world’s largest auto market.

The firm is targeting growth of seven to eight per cent, versus 15 per cent in 2017, BMW CEO Harald Krueger told reporters at China’s main annual auto show being held in Beijing.

“We don’t expect huge doubledigit growth like in the past, we expect single digit growth,” he said.

BMW, which has a local venture with Brilliance China Automotive Holdings, is also planning a new alliance with Chinese carmaker Great Wall Motor Co to develop the carmaker’s Mini brand in China. — Reuters