Import tariffs will be lowered in parallel import vehicle market Wenxi temporarily

On May 22, the Customs Tariff Commission of the State Council issued an announcement saying: With the approval of the State Council, starting from July 1, 2018, 135 tax numbers with a vehicle tax rate of 25% and 4 tax numbers with a tax rate of 20% will be set up respectively. The tax rate is reduced to 15%, the tax reduction rate is 40% and 25% respectively, and the tax rate of 79 tax codes for auto parts tax rates of 8%, 10%, 15%, 20%, and 25% is reduced to 6%. The average tax reduction rate is 46%.

As soon as the tax-reduction news was released, various multinational car companies responded in a hurry and announced that they were about to start down officials. The rapid response of imported cars in China’s regulations has caused consumers to look forward to price cuts. What moves are the parallel imported cars that account for 20% of the imported auto market?

"Is it not cheaper to buy parallel imported cars?" A friend who recently paid attention to parallel imported cars, after hearing about the reduction in tariffs, immediately asked the reporter if he could wait to buy a cheap car. Many consumers who are interested in purchasing parallel imported vehicles have issued the same question: After this tariff reduction, will the price advantage of parallel imported cars become more apparent and more “close to the people”?

♦ Whether the price cut is decided by the market

"As an example of an imported vehicle with a guidance price of about RMB 900,000 in China's market, the imported CIF value of the vehicle is 240,000 yuan, and the tariff rate is 25%, and the customs tax is 60,000 yuan. The tariff rate accounts for the manufacturers' guiding price in the Chinese market. After the tax reduction, the tariff rate will be reduced from 25% to 15%, and this imported vehicle will impose a tariff of 36,000 yuan, which is a reduction of 24,000 yuan before the tax reduction. And the consumption tax will also be reduced accordingly." The responsible person of the Office of the Customs Tariff Commission of the State Council, in answering a reporter's question, vividly described the objective price reduction space that would be brought about by the tariff reduction.

But at the same time, his other words are quite profound: "The price of automobiles is determined by a number of factors. Import tariffs are only one of the factors. From the point of view of the price of automobiles, the market price determined by manufacturers is very high. To a certain extent, the final price of the car is determined, and there is a certain link between the tariff and the manufacturer's market guide price. Lowering the tariff is a factor in reducing the price, but whether or not the car reduces its price and the rate of decline are all market behaviors. How much the price cut is the market has the final say.

"The tax reduction does not necessarily mean that the imported car will be reduced in price." Cheng Cheng, head of a sales shop in Beijing that runs parallel imported cars, tells the reporter frankly that the key depends on market trends. The multinational car companies have said that the evaluation of the New Deal and the current price system In fact, it is also watching the market trend, as to whether or not the ultimate real gains to the terminal, have to wait until the new pricing strategy completely. The same applies to the parallel imported car market. Although it is not as straightforward as the impact of cross-border car companies on China-made vehicles, traders and distributors are also watching the latest trends in the market.

♦ Businesses and consumers are watching

“The reduction in tariffs will have short-term pains for dealers. On the one hand, it will be reflected in the price of some of the inventory vehicles that have already reported taxation. On the other hand, it is reflected in the vehicles that have been purchased but have not yet been declared. Customs declarations can be enjoyed in customs declaration after one day.” Wang Ranran, Assistant to the Chairman of Rundong Motor Group and Deputy General Manager of the Parallel Imports Division, told reporters that due to the above reasons, the market will present short-term shocks and wait-and-see periods in the short term after the New Deal is released. There will be a lag period in sales performance.

“From the customs clearance figures in March and April, China’s parallel import vehicle data has shown a year-on-year decline.” Wang Cun, director of the Import Vehicle Committee of the China Automobile Dealers Association, told the “China Automotive News” reporter that in fact, tariffs on imported cars were lowered. Many car dealers predicted from the beginning of this year that at the Davos Forum at the end of January, Liu He, the then director of the Central Financial Leadership Group Office, pointed out that China will orderly reduce automobile import tariffs; during the two sessions of the National Conference in March, the Minister of Commerce Zhong Shan said that it will lower import tariffs on cars and some daily consumer goods; at the 2018 Boao Forum for Asia in early April, it also clearly released signals that China will greatly ease access to the manufacturing market. The release of this information has resulted in a large number of vehicles. Businessmen began to wait and see the dynamics of the New Deal.

Consistent with the information disclosed by Wang Cun, the reporter learned that the volume of customs clearance for parallel import cars in Tianjin Port has been declining from the same period last year, and many traders are still waiting to see after the release of the New Deal. Li Li, deputy general manager of China Import & Export (Tianjin) Import Auto Trading Co., Ltd., stated that many traders have made deployments in advance in response to possible changes in the parallel imported car market, and therefore the impact will not be too great.

“The transaction volume of our shop in these two days is not much. The two customers I talked to have said that they will wait until July 1st to see how the price changes and then determine the purchase of cars.” Manager Cheng told reporters that the release of the New Deal brought not only The wait and see of car dealers, consumers are also in a state of holding money, and this part of consumers are mostly concentrated in the price range of 40,000 to 500,000 yuan, which is not particularly large for the consumers’ intention to purchase in the price range of over one million yuan. For example, manager Cheng said that just in the past two days, a customer who purchased the Lincoln Navigator still placed a single order when the price suddenly rose by 50,000 yuan.

♦ Increase in price drop is a trend

"The aim is to promote the automobile industry to strengthen competition by lowering import tariffs, and to guide the automobile industry to improve quality and efficiency. We hope that lowering the price of cars will help drive down the price of cars and allow consumers to receive more benefits." The person in charge of the Office of the Customs Tariff Commission of the State Council answered questions. The contents of the question indicate the main purpose of this time of tariff reduction. For this, the industry is generally optimistic about the direction of the parallel imported car market after July 1.

"It is expected that before the July 1st period, the Parallel Imported Automobile Traders will adopt a wait-and-see attitude. The customs clearance will be drastically reduced. Terminals will be sold at some low prices, but the amount will not be particularly large; after July 1, they will be formed. With the new price system, the import volume of parallel imported vehicles will recover in the following two or three months.” Wang Cun told reporters that recovery growth is expected to continue until the end of this year, and then gradually return to normal to achieve a balance between supply and demand.

Li Li believes that the parallel import volume of automobiles will surely increase along with the import vehicle market. In addition to this tariff reduction, the support of national policies has been a key factor in promoting the healthy growth of the parallel import vehicle market. Sun Yong, a senior commentator in the automotive industry, also pointed out that the parallel imported car market will enter the quick-frozen mode in the short term, but in the long run, the increase in price drop is an inevitable trend.

“The trend of prices is on the one hand to see the market's ability to digest, and it is also affected by the price of the regulatory vehicle market.” Wang Ranran said that for the moment, the downward trend in tariffs brought about by the reduction of tariffs on imported vehicles is an inevitable trend, and parallel imported vehicles are due to their autonomy. With sex and flexibility, the impact will be more prominent and complex. At the same time, he believes that in the long run, the New Deal will have a positive incentive for the parallel imported car market. In the future, it will not rule out more businesses joining this camp. This will bring about full market competition and it will also help The positive increase in the total amount.

"Do not look at advertising to see the effect." Manager Cheng said that the effect of lowering tariffs on the parallel import car market will still have to wait until July 1 after further observation of market trends.

♦ Do not let the market block policy dividends

“The import tariffs on automobiles are lowered. For parallel imported vehicles, the biggest beneficiaries are car dealers. As for whether or not consumers can really enjoy the benefits ultimately, it is necessary to see if there is a decisive effect of market forces.” During the interview, an industry source disclosed such information. He pointed out that under the New Deal, consumers do not necessarily have real benefits.

Why are tariffs reduced and costs down? Consumers may not be able to benefit from it? The above-mentioned person merely used the word "market behavior" to casually skip the word. After discussing with many people in the industry, the author heard another layer of meaning: the profit-making nature of the business. This could not help but remind the author that some time ago, when Sino-US trade friction was serious, some dealers misjudged Sino-U.S. trade frictions and they would certainly “scorched away”. U.S. regulation of imported cars would either increase tariffs or be set at a threshold. Specifically hoarding a group of cars, waiting to take advantage of income.

Although in the end the "wishful thinking" of this part of the business was frustrated, it does reflect the problem of the business ideas of some businesses from the side: it is not resolute in doing business in a down-to-earth manner, and it only wants to "step on" policies to make quick money.

Today, China's parallel imported car market has enjoyed a good momentum of development. Thanks to the many policies introduced by the state, its main purpose is to reduce monopoly and promote full competition in the imported car market. With the introduction of various support policies, competition will become more intense in the future or as more participants will join. At the same time, after the reduction of tariffs, the imported cars market in China will usher in a new wave of depreciation, which may bring a certain impact to the parallel imported car market. In this situation, the parallel import car market practitioners must put forward higher requirements for themselves, and the three major factors of car source, price and service become the “magic weapon” under the new round of reshuffling.

Positioning determines the pattern and the goal determines the effect. "Step on" policies to make fast money are destined to be eliminated by the market. If the road to the future is to be long-term, it will be a good idea for consumers to have a good service.