Import tariffs are expected to drop by 5.4% next year
In the coming year, the tariff on imported cars in China is set to decrease by 5.4%, marking a slight reduction compared to previous years. The price competition earlier this year was intense, and now, with new tariff rates announced, the market is preparing for adjustments. Starting from January 1 next year, the tariff on imported cars with engines below 3.0 liters will drop from 38.2% to 34.2%, a reduction of 4 percentage points. For vehicles over 3.0 liters, the tariff will fall from 43% to 37.6%, a decrease of 5.4 percentage points. This rate of reduction is slightly lower than the 5.6% and 7% cuts seen in 2003.
In addition to tariff reductions, China’s import car quota will increase by another 15% this year, following a total value of over $900 million. By 2004, the auto import quota is expected to exceed $11 billion. This year, the number of imported cars is anticipated to surpass 160,000 units, averaging about 14,000 per month. While the volume of imported cars remains relatively small—only around 4% of the total domestic market—they account for approximately 15% of the total value, based on an average price of RMB 450,000 per vehicle.
Industry experts predict that the 2004 imported car market will undergo significant changes. With more models entering the market and easing license supply, there may be a correction in model structures. Combined with factors such as tariffs, exchange rates, and domestic policies, prices are expected to decline notably. However, short-term price drops are unlikely due to the extended validity of this year's permits, which can be used until March 31, 2024.
Throughout late October to early December, prices were "strengthened" due to permit availability, but they eventually eased. Major models like Toyota’s Camry and Mercedes-Benz, BMW saw price reductions. Some dealers in Guangzhou and Shanghai have even retracted offers above RMB 400,000. Many dealers mentioned that some prices had already dropped due to the "market plunge" caused by permit releases. As financial pressure increases at year-end, some dealers are forced to lower prices to recover funds quickly.
Despite these fluctuations, most dealers believe that significant price drops won’t happen before mid-2024 due to the order cycle. Meanwhile, domestic car sales have surged by 70% year-on-year through November, reaching 1.73 million units. New models and average price reductions of around 10% have contributed to this growth. In November alone, car sales hit 191,000 units, the highest single-month figure of the year. Overall, automobile production has increased by 35%, with passenger cars rising sharply by 83.7%.
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