China To Abolish Auto Import Quotas, Lower Import
Duties In 2005
China announced that in order to comply with WTO requirements,
it would abolish auto import quotas, and lower import
duties on all imported autos beginning in 2005. By July
2006, import duties will average 25 percent.
China is currently the fourth largest producer of automobiles
in the world. Up until recently, most premium models were
imported from the Japan and Europe. Beginning last year,
virtually all car makers have sought to build production
facilities in China to take advantage of growing demand
in China, which started to take off in 2003. Before last
year, import quotas were the standard method of protecting
China's growing domestic auto industry.
In 2003, China's auto imports totaled US$14.4 billion,
growing 84 percent over 2002. Whole cars totaled 172,000,
with this amount further breaking down into 103,000 sedans,
39,700 sedans and small vans seating nine persons or less
taking 10,900.
Many auto importers have exported pre-assembled
kits to China for final assembly to get around auto
import duties.
Generally speaking, cars made in China have risen to
international quality standards. Honda Denway in Guangzhou
has already started exporting Honda Accords to the countries
of Southeast Asia.While auto sales have increased, there
is increased speculation that the automobile market is
over-heating, and there will soon be over-capacity.
For Chinese car buyers, prices have fallen considerably,
so that buying a car is within the reach of most urban
families. Retail discounts and incentives will increase,
and more of the auto makers will make their money from
financing services.
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