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The Auto Industry Will Expand Its Opening Up

Apr 11, 2018

During the Boao Forum, Chinese leaders announced that they would relax the restrictions on foreign investment ratios in the auto industry as soon as possible, and will reduce auto import tariffs this year. In response, a policy researcher analyzed that lowering the import tariffs on automobiles is a manifestation of China’s national strength. “On the relaxation of foreign capital ratio restrictions, the government’s previous position was to pilot 'new energy vehicles', and this time’s position is ' Relax the ''car industry'' as soon as possible, indicating that the intensity of liberalization will increase and the pace will accelerate."

How to relax the influence of foreign capital stocks

The SAIC Securities Office official told reporters: “Less than the restrictions on foreign capital ratios reflect our own ability is already strong enough, in fact, foreign capital dependence on the domestic market is still very large. And the reduction of automobile import tariffs, the impact will also be Yes, with the escalation of domestic consumer demand, there may be some impact on the high-end car market, but overall, the price of imported cars is difficult to reduce significantly, as domestic independent brand cars increasingly meet the consumer demand of the people, and the competitive advantage It will be more obvious."

Industry insiders pointed out that after the foreign-capital stocks ratio is released, the impact on traditional joint ventures will not be too great, because the two sides will not change much in the short term, but the changes in the new energy vehicle sector may be significant.

The policy of foreign car manufacturers to deploy new energy automobile market in China has long been loosened. The "Opinions on Improving the Management of Automobile Investment Projects" issued in June 2017, letting foreign companies set up joint ventures for pure electric vehicle production enterprises, can be free from the restrictions imposed by the two companies. Since then, the China-U.S. dollar first meeting announced on the website of the Ministry of Foreign Affairs has reached a multi-faceted consensus that it will gradually reduce vehicle tariffs. Prior to June 2018, the pilot project of opening up the ratio of foreign-invested shares of special vehicles and new energy vehicles was implemented within the Pilot Free Trade Zone.

The accelerated expansion of foreign capital helps to jointly expand the Chinese new energy vehicle market. In 2017, the development momentum of China's new energy vehicles was strong, and the market share of Chinese brands continued to increase, achieving both domestic and international market growth. The production and sales of new energy vehicles were all close to 800,000 vehicles, which represented a year-on-year increase of more than 53%.

BYD relevant sources said: "The imported electric vehicles are much more expensive than the domestic electric vehicles. Therefore, whether it is to reduce the automobile import tariffs or to relax the restrictions on the foreign capital ratio, the impact on the domestic new energy automobile market will not be too great."

Jianghuai Automobile said: "The relevant measures have little effect on the company, because JAC and imported car companies are not yet major competitors. The joint venture between the company and the public accounts for 50% each, and there are currently no other joint venture plans."

Analysts in the automotive industry believe that, to a certain extent, reducing the import tariffs on automobiles will have a certain impact on the domestic luxury car market, but the impact will be limited. With the rise of China's own brands and the auto industry, the liberalization of competition is an inevitable trend. Full market competition will enable Chinese mainstream car companies to grow into truly globally competitive companies, and market concentration will be further enhanced.

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