China lowers import tax

China announces reduced import tariffs on foreign cars

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British car manufacturers this week welcomed the reduced import tariffs announced by China earlier this month, and said it would provide a boost to the UK’s car industry while it tries to deal with declining exports to the European Union.

During his keynote speech at the 2018 Boao Forum for Asia, President Xi Jinping this month said that his country was to ‘significantly lower’ tariffs on car imports before the end of the year. Even more significant: he announced that China plans to reduce restrictions on overseas ownership in its auto industry.

In 2017, with exports to the European Union dropping by 5% and overall exports dropping by 1.1%, British car exporters were saved from possible ruin by higher demand from China, Japan and the United States. British auto exports to China increased by no less than 19.7% in last year.

Mike Hawes, the Chief Executive of the SMMT (Society of Motor Manufacturers and Traders) referred to China as a ‘crucial bilateral trading partner’ for this country’s car industry.

Hawes added: “It’s encouraging to hear that China is considering reducing import tariffs on cars as this will certainly encourage demand for Britain’s ever-growing range of premium, luxury and sports vehicles.”

Hawes earlier stated that the industry desperately needed clarity from the British government during the current Brexit negotiations. With nearly 80% of cars being exported, the British car industry depends heavily on exports.

With demand from the EU dropping, large UK carmakers have stepped up their efforts to export to China. In January, Aston Martin announced plans to invest £620m in that country, including expanding its dealer network from 10 to 20.

McLaren Automotive, meanwhile, also plans to add 10 new retailers in China this year the company MD for that country, Dan McElholm recently said.

In other news from the British auto industry, industrial strategy has once again found its way to the UK political Agenda. A House of Commons debate was scheduled for yesterday, nearly a year after the announcement by business secretary Greg Clark that the government’s new Industrial Strategy Challenge Fund will support six technologies.

Batteries is one of those technologies – and Clark has established a £246m support programme for this industry, with the focus mainly on electric car batteries.

The government’s motivation is partly to make sure that the British automotive industry does not suffer as it transitions from fossil fuels to electric cars.

The announcement by Vauxhall that as many as 100 of its dealers throughout the UK are to be axed, and the news about job losses at Jaguar Land Rover which was caused by a severe slump in sales of diesel cars, are a stark reminder of exactly how dependent the British car industry still is on old technologies.

Currently, the supply of the most popular type of electric car battery (lithium-ion) is dominated by firms in China, South Korea and Japan. These firms have a two-decade lead in battery technology and they are investing large amounts to remain ahead of the pack.

Whether driving British or imported vehicles, motor traders in the UK should always ensure they have the best motor trade insurance possible.

 

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