China has decided to cut the tariffs on auto imports from 25 to 15 per cent starting July 1 thereby giving international players substantial benefits.
The cut in import tariffs will mean that international players will have greater access to the world’s largest auto market amid an easing of trade tensions with the United States.
According to the Ministry of Finance, this was part of efforts to open up China’s markets and spur development of the local auto sector. A small number of imported trucks are taxed at 20 per cent currently. Import tariffs for auto parts would be cut to 6 per cent from mostly around 10 per cent, the ministry said in a statement.
The reduction in import tariffs will benefit the likes of BMW, Tesla Inc and Daimler AG’s Mercedes-Benz. Tata Motors-owned Jaguar Land Rover (JLR) will also benefit from the proposed duty cut on imported cars in China.
According to estimates by analysts, the region accounts for 26 per cent approximately at the Ebitda (earnings before interest, tax, depreciation and amortisation) level for JLR’s earnings. Its contribution in volume terms in total sales in 28 per cent. In April, JLR retailed 45,180 units of which China accounted for 12,970, up 29 per cent over the year-ago period.