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Lincoln BMW Reduced Guiding Price Tariff For American Cars And Promoted Import Car Market
- Dec 17, 2018 -

With China suspending tariffs on automobiles and parts originating in the United States, a large number of multinational automobile manufacturers with U.S. capacity to deploy and export related products to China will benefit.

The Office of the Tariff and Tax Commission of the State Council of China released last Friday (December 14).

Notice

It decided to suspend tariffs on automobiles and parts originating in the United States for three months, covering 211 items, from January 1, 2019.

This means that China's tariff on imported cars from the United States will be reduced from 40% to 15%.

In order to expand the opening-up and meet the diversified needs of consumers, China took the initiative to reduce import tariffs on automobiles and parts on July 1 this year, reducing the rates of 135 tariff lines with 25% for automobiles and 4 tariff lines with 20% for automobiles to 15%.

Since then, in response to the unilateral tariff increase imposed by the United States on vehicles imported from China, China has imposed a 25% tariff on 659 imports originating in the United States of America of about $50 billion since July 6.

"The imposition of tariffs on automobiles and parts originating in the United States is a compulsory move to counter protectionism in the United States. The suspension of tariff increases is a concrete measure to implement the consensus between the two heads of state. It can expand the import of marketable products and meet the needs of the domestic market and the people. We hope that, in accordance with the consensus of the two heads of state, on the premise of mutual respect, equality, trustworthiness and consistency of words and deeds, the two sides will intensify consultations towards the abolition of all tariff increases and actively build a balanced, inclusive and win-win new economic and trade order between China and the United States." The Tariff and Tax Commission of the State Council of China said in the announcement.

Interface reporter survey found that many multinational automobile manufacturers have responded to this.

BMW China announced on Saturday (Dec. 15) that it will make appropriate adjustments to the retail prices of BMW X5, X6, X5M and X6M manufacturers originating in the United States, which will be sold in the mainland market from Dec. 15.

Among them, the new BMW X5, which just appeared on the market in early December, suggested that the retail price be adjusted to 779,900 yuan, equivalent to the resumption of tariff reduction to 15% of the price. The manufacturers of BMW X6, X5M, X6M and the previous generation of BMW X 5 still on sale suggest that the retail price also be lowered to the level when the tariff is 15%, that is to say, to resume the implementation of the recommended retail price from May 25 this year.

Tesla has also announced price cuts for Model S and Model X models in the Chinese market. According to the manufacturer's official website, the price of Model S 75D dropped 5% to 742,300 yuan from 782,900 yuan; Model S 100D dropped 11% to 849,600 yuan from 954,600 yuan; Model X 75D dropped 75% to 796,800 yuan from 861,800 yuan. It is noteworthy that Tesla made a quick decision to raise the price of products when the tariff on imported cars was raised in the United States.

Likewise, it has been learned that most of Lincoln's major hot-selling models in China will continue to be sold at a tariff of 15%. At present, most of the models Lincoln sells in China are exported from North America.

An industry insider told an interface reporter that this round of tariff cuts will bring visible benefits to the manufacturer. As a 100% pure imported luxury car brand in the United States, Lincoln was most affected by the tariff adjustment process in 2018.

When the State Council Tariff and Tax Commission decided to cut tariffs in May this year, Lincoln China announced a reduction in the price of all its models, when the reduction ranged from 5% to 7%.

In July, when the tariff on U.S. automobiles was raised to 40%, the sales prices of most of Lincoln's major models remained unchanged, i.e. at the level of 15% tariff.

"After the last tariff increase, Lincoln never implemented a 40% tax rate, so potential consumers of Lincoln automobiles can now buy most of Lincoln's popular models at a 15% tax rate without waiting until the new tariff policy is formally implemented in 2019." A Lincoln 4S salesman said.

In fact, Lincoln had previously subsidized all types of cars sold in order to avoid transferring tax costs to individual consumers. With tariff cuts this time, Lincoln's pressure will obviously be eased. The benefits of this tariff cut may soon be reflected in the company's financial statements.

Similar to Lincoln's approach is BMW. Previous official guidance prices for the brand show that BMW Chinese stakeholders said that in the last round of tariff increases on American cars, they did not transfer all the new tariff costs to the price of their products, but took part of the costs on their own.

On the other hand, Lincoln Automobile is actively promoting the localized manufacturing plan in the Chinese market. According to the plan, the brand will launch a new domestic SUV for the development of the Chinese market at the end of 2019.

Affected by the new tax rate, Lincoln Motors'Ford Motor Co. rose 2% on the 14th.

Up to the time of publication, Mercedes-Benz has not yet made a price adjustment decision. The manufacturer currently sells GLE, GLS and other North American models on the Chinese market by import.