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China cuts import tariffs in the automotive sector to 15 percent

07/2017, Mercedes S-Class driving report Heinrich Lingner
China is lowering import duties in the automotive sector
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D he Ministry of Finance in Beijing has now announced that from July 2018 the duties on imports for most car models are to be reduced to 15 percent from 25 percent. This step is not of course primarily strategic in nature. Because not only once did Donald Trump threaten the world's largest automobile market with punitive tariffs of up to 150 billion dollars.

Manufacturers want to lower prices

The reactions of the auto industry could affect the car-loving people in the Far East could hardly be better: you want to adjust prices. The tariff cuts can be interpreted as a strong sign that China is continuing on its path of opening up. 'This is another important step for open markets and a sign of strengthening international trade,' says VDA boss Bernhard Mattes. According to experts, not only the Chinese customers themselves, but also the Chinese market should develop even more dynamically. In 2017, 28.9 million vehicles were sold in China, of which 1.22 million were imported.

Tesla Model X 14,000 dollars cheaper

Wolfgang Groeger-Meier
The Tesla Model X should be 14,000 dollars cheaper in China.

One man has not been satisfied with mere announcements for decades: Elon Musk. And so Tesla announced that the most expensive Model X in China should be up to 14,000 dollars cheaper, which corresponds to a reduction of 6.4 percent at a previous price of 219,000 dollars. The cheapest Model S version will soon cost $ 111,200 instead of $ 118,800. In the US, the entry-level version costs $ 75,000 (net). In this country it beginsPrice list for the Tesla Model S 75D at 79,120 euros (net), which corresponds to 92,646 dollars (net).

German manufacturers can look forward to

Achim Hartmann
Even more 7 Series BMWs could drive around in China in the future.

But who benefits from the German automobile manufacturers from this tariff reduction? Arndt Ellinghorst, analyst at the investment advisor Evercore ISI, has a clear opinion: 'Based on the current import volumes, BMW, Daimler and VW would be the big beneficiaries of this decision.' Shares in China are among the big winners.

For example, Porsche only supplies imported vehicles from German production. BMW, which sold 600,000 vehicles in China last year, first had to import 200,000 of them at great expense. At Volkswagen, 189,000 of the 4.18 million cars sold in China were imported. In general, an import share of around one third can currently be assumed. 'Specifically, BMW would get 1.2 to 1.75 billion euros more in earnings before interest and taxes, for Daimler 1.1 to 1.65 billion euros and for VW 750 million to 1.14 billion euros,' Ellinghorst recently said calculated.

Joint venture obligation will fall until 2022

But not only will the tariff reduction, but also the reduction of the requirement to build cars without local business partners by 2022 to share increases in German manufacturers. In other words, so far it is only allowed to sell vehicles in China if there is a 50/50 joint venture with a local company.

In our photo show we show you the 50 most popular cars in China in 2017.

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