Import tariffs have dropped significantly and foreign brands may stir new energy markets

After a lapse of 12 years, China's auto import tariff rates once again ushered in a downward adjustment. On May 22, 2018, the Customs Tariff Commission of the State Council issued an announcement on the reduction of import tariffs on completed vehicles and parts. From July 1, it will reduce the import tariffs on vehicles and parts. Among them, 135 tax numbers with a vehicle tax rate of 25% and 4 tax rates with a tax rate of 20% are reduced to 15%; automobile parts tax rates are 8%, 10%, 15%, 20%, and 25%. The 17 tax rates were lowered to 6%. It is worth noting that new energy vehicles will also enjoy the same treatment.

Taxation of auto import reduced to trigger foreign investment boom

Speaking of the downward adjustment of import tariffs, Xi Jinping, Chairman of the Boao Forum for Asia held on April 10th, has already proposed: “This year, we will reduce vehicle import tariffs considerably.” On April 25, the Ministry of Industry and Information Technology also stated that it has studied with related departments. Reduce the adjustment of auto import tariffs. From the proposed reduction of auto import tariffs to the announcement of the reduction of auto import tariffs on May 22, only 40 days have been introduced on the relevant policies, have to say that this amazing efficiency to many people by surprise, but also triggered the revelry of major foreign car companies After the tariff reduction was announced, many car companies began to respond positively.

As the biggest beneficiary of the reduction in import tariffs, the automobile enterprises that mainly focus on high-end luxury brands have also announced their declarations at the first time. The Audi brand said that it will simultaneously adjust the prices of related products and publish it on the official website of FAW-VW Audi; BMW officials stated that it will evaluate the current proposed retail price system and actively respond to government measures; Porsche China has also started the process of evaluating products. According to the tariff reduction policy, the retail price of the product will be adjusted and announced in due course. In addition, luxury car companies such as Volvo and Maserati have also issued relevant declarations and actively responded to the reduction in import tariffs on the automobile. It is not hard to imagine that the reduction of import tariffs on automobile vehicles will bring more room for profit to these millionaire brands, further increasing the competitiveness of luxury cars in the domestic automobile market.

Allowing the sole proprietorship and import tax rate to be lowered, the "Tesla model" has become a norm

In the new energy market, the mainstream models are still dominated by independent brands, and the reduction in import tariffs has also opened up a shortcut for the influx of foreign brand new energy products into the domestic market. When it comes to foreign brands of new energy car companies, Tesla has become one of the car companies that have to be mentioned. After the tariff reduction policy on imported cars was announced, Tesla’s official stated for the first time that it had adjusted the product price according to the tariff and issued it to all sales outlets in China. From July 1, Tesla sold in China. The overall price cuts of car companies, the price cuts of different models ranged from 40,000 to 90,000.

The news of Tesla’s establishment of a company in Shanghai and the construction of a factory in China in the fourth quarter was recently announced, which was speculated with the popular model Model 3. At present, the low-priced version of the United States is priced at 35,000 US dollars, approximately 223,000 yuan, plus 25% tariffs and 1% of the transport costs, the total price of 281,500, plus 17% VAT to 329,300, accounting for about 30,000 The purchase tax is priced at 359,300 yuan. When Tesla builds a factory in China, it will no longer bear 1% transportation fee. After adding the import tariff of the whole vehicle to 15%, Model 3 will add 15% customs duty and 17% VAT will have a post-sale price of 300,000. Together with the purchase price of 30,000 yuan, the landing price is 330,000 yuan. For this "low-priced model", it has already changed its price to 30,000 yuan, which is also more than the price of the joint venture product. The price cuts for the high-end models, Model X and Model S, will also be greater. This will bring Tesla a stronger market share in the domestic new energy market alone.

In addition, last year’s policy on opening up foreign equity ratios was formally implemented on April 17 this year. The National Development and Reform Commission stated: “This year China will cancel the restrictions on foreign shares of special vehicles and new energy vehicles. In 2020, the ratio of foreign investment shares of commercial vehicles will be removed. In 2022, the foreign-investment-to-equity ratio of passenger cars will be abolished, and at the same time, no more than two joint ventures will be removed. With the five-year transitional period, the auto industry will cancel all restrictions.” The formal implementation of this policy will undoubtedly cancel the past foreign-funded enterprises. The situation of entering into China must be “bundled” with sales, opening a convenient door for many interested foreign companies. As an afterthought, the new energy magnate has finally understood that Tesla's "jumping of votes" in the construction of factories in China several times. It is precisely such a "single opportunity" that Musk has been waiting for. It is believed that the number of foreign car companies like Tesla is not small. The opening of foreign energy shares of new energy vehicles coupled with the reduction of import tariffs will make it difficult to imagine that in the next few years, new energy will become an inevitable trend. Many foreign giants tap into new energy sources and dominate the high-end model market.

Independent new energy brands are less affected, and the development of high-end markets has become a dilemma

According to statistics, China imported more than 1.2 million vehicles in 2017, mainly including Mercedes-Benz, BMW, Audi, Volkswagen, Toyota, Lexus, Porsche, etc., of which over 30 million models accounted for 70% of the market. With regard to the tariff reduction for imported vehicles, many people doubt whether they will have an impact on their own brands. At present, it appears that more than 65% of China's self-owned brands sell for less than 150,000 yuan, and the subsidy price of new energy vehicles is also generally lower than 200,000 yuan. The market sales of mini-cars are less than 100,000 yuan, and Foreign brands do not have a competitive relationship.

However, for independent brands that want to develop high-end markets, the reduction of automobile import tariffs will undoubtedly increase the difficulty. More than 300,000 vehicles will not be controlled by joint venture brands as they have in the past, which has led to the collapse of joint venture products and foreign products. The self-owned brand wants to open up the situation in the high-end market of more than 300,000 yuan, and the competitors facing it will also be more powerful foreign brands and joint venture brands that are likely to further explore the price after the reduction of import tariffs.

On the one hand, the reduction in import tariffs on the automobile shows China’s current leading position in the automotive industry level, which is in line with China’s current auto market conditions; on the other hand, it also contributes a booster to the domestic automobile market. The declining market conductivity has enabled more consumers to purchase cars, which will further promote the development of China's auto industry.