May 23 (NBD) -- China will cut down the tariffs on imported automobiles and car parts, starting from July 1 this year, in a bid to deepen the opening-up.

The Ministry of Finance (MOF) announced Tuesday that to lower the import duty for automobiles will facilitate the supply-side reform, promote the restructuring and upgrading of the auto industry, lift up the quality and efficiency of car-manufacturing, enrich supplies of vehicles in domestic market and bring better deals to domestic customers. After the tariff reduction, the average tariff rate for automobiles is to stand at 13.8 percent and that for auto parts 6 percent, which fits with the actual situation for China's automobile industry, said the MOF.

Citic Securities predicted that after the tariff cut, customers will pay 8-15 percent less for imported cars and annual sales of imported cars will increase to 1.5-2 million units from 1-1.2 million units.

A person-in-charge at the Tariff Regulation Committee of the State Counci pointed out that although tariff reduction is one of the factors leading to a lower price, yet whether the car price will be marked down and to what degree will be determined by the market. The policy is aimed to enhance competition in the automobile industry so as to push up quality and efficiency, the person-in-charge explained. In addition, the committee does hope to bring down car price through tariff reduction.

Luxury carmakers responded immediately to the new policy.

Tang Fengliang, Director of PR and Press of Porsche China, acknowledged the benefits that the tariff reduction will bring to Chinese consumers, adding that the company will announce the price adjustment in due course.

Tesla said that the new price lists based on new tariff standards had been sent to sales outlets across China. BMV voiced its welcome for the decision, saying that the company will review the current pricing system and take corresponding measures. Other well-known luxury brands including Lexus, Bentley, Mercedes-Benz also claimed that they would release the adjusted measures later on.

Jia Xinguang, a senior analyst of China's auto industry, held that once the tariff is lowered, joint ventures, especially China-South Korean and China-Japanese ones, will possibly cut down the price so as to grab the medium- and low-end auto market, which will have a certain impact on China's domestic brands.

But Kazuhiro Kobayashi, Toyota's CEO for the China region, had a different idea. Kobayashi once said in an interview with NBD that theoretically tariff cuts will push down the price, but price is not the only factor that influences customer satisfaction.


Email: gaohan@nbd.com.cn