Global carmakers from BMW AG to Toyota Motor Corp got some good news from China after President Xi Jinping reiterated a pledge to reduce import tariffs on vehicles this year, heeding decades-long pleas from companies seeking better access to the world’s biggest auto market.
China will “significantly lower car import tariffs” and “sincerely hopes to boost imports,” Xi said in a speech at the Boao Forum in Hainan Tuesday. Xi also reiterated plans to loosen foreign ownership limits for car ventures and said the government will try to roll out the policies as early as possible. He didn’t offer details.
Shares of local carmakers BAIC Motor Corp., BYD Co. and Guangzhou Automobile Group Co. all slumped after the speech as lowering the current 25 per cent import tariff would allow foreign carmakers to bring in more vehicles without being disadvantaged. Xi’s move to open up the car market comes amid a tit-for-tat trade war with the world’s largest economy, in which China last week proposed an additional 25 per cent import tax on vehicles made in the US.
High-end autos, in particular, will feel the effects of a tariff cut, as less of their production has moved locally. Toyota’s Lexus, in particular, stands to benefit as the only premium marque that doesn’t manufacture in China or hasn’t announced plans to do so.