Light customs trade | Interpretation of import tariff reduction

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Light customs trade | Interpretation of import tariff reduction

On May 22, 2018, China reduced the tax rate on automobile import duties from the previous 25% to 15%. This tax rate adjustment means that the tax cost of imported vehicles in the Chinese market will drop, and will directly lead to a drop in the market price of imported vehicles.

Light customs trade | Interpretation of import tariff reduction

Ministry of Finance's Reducing Import Tariffs on Vehicles and Components Announcements

In other words, after lowering the VAT rate, imported cars once again ushered in price cuts, and we have to buy imported cars cheaper.

Current import vehicle price composition

The price of vehicles imported into the Chinese market consists of import costs and profits. The most important import costs are:

1. Vehicle tax-paying prices (that is, "naked car prices" without any taxes, hereinafter referred to as "crip prices");

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2. Tariffs;

3. Consumption tax;

4. Value-added tax.

The formula for calculating their taxes is shown in the figure below.

Light customs trade | Interpretation of import tariff reduction

Calculation Formula for Import Car Taxes in China

< It can be seen that the taxes on consumption tax and value added tax that need to be paid are all related to the tariffs and tariffs, and the tariffs and duties are equal to the duty paid* tariff rates. In other words, the reduction of the tariff rate will directly reduce the taxes of consumption tax and value-added tax, form a domino effect, and ultimately significantly reduce the import cost of imported vehicles, which will directly lead to a drop in the price of imported vehicles.

What are the actual impacts of the tax rate cut on the car price?

How much can it reduce the price of the car? We set the CIF of imported cars to a. According to the calculation, when the imported vehicle's displacement is 2.0L, the new tax rate will reduce the import cost equivalent to 13% of the landed price; if the imported vehicle's displacement is 4.0L or more, the new tax rate will be reduced. Import costs can reach 18% of the CIF price.

Light customs trade | Interpretation of import tariff reduction

Lower tariffs will benefit large-displacement vehicles

We choose some from the 500,000 to 2 million price range The popular model is a specific example.

The price of 500,000 yuan, we chose the Lexus RX 300 Mark Levinson four-wheel drive F SPORT model, the manufacturer's guide price is 55 million yuan.The tariff dropped to 15% after the model's The guidance price is 507,000 yuan and the price is 43,000 yuan.

Light customs trade | Interpretation of import tariff reduction

Lexus RX

The price of 800,000 yuan, we chose Land Rover brand-new discovery 3.0 V6 SE, the manufacturer guide price is 8410 yuan.After the tariff is reduced to 15%, the guide price of the model may be 78,200,000 yuan, A price reduction of 59,000 yuan.

Light customs trade | Interpretation of import tariff reduction

New Land Rover Discovery

< For the price of 1 million yuan, we chose the Mercedes-Benz S 320 L luxury model with a manufacturer’s guide price of 1.099 million yuan, and after the tariff dropped to 15%, the guide price for the model was 1.022 million yuan. Reduced price by 77,000 yuan.

Light customs trade | Interpretation of import tariff reduction

Mercedes-Benz S-level

In the 2 million-yuan price, we chose Porsche. For the Panamera 4S Executive model, the manufacturer’s guide price was RMB 1,829,300.After the tariff was reduced to 15%, the model price was RMB 1.695 million, and the price was reduced by RMB 127,300.

Light customs trade | Interpretation of import tariff reduction

Porsche Panamera 4S Executive

Tariff adjustments also have an impact on taxes on imported auto parts. At present, China's auto parts imports and exports are subject to customs duties and value added taxes. In the composition, the tariff rate is 10%, and the VAT rate is 16%. After adjustment, the tariff rate for imported auto parts in China drops to 6%.

It can be seen that after tariff reduction, China After the reduction of the tariff rate on imported cars, the price of cars may generally have a five-digit or even six-digit decline, which is just like the drought of rain, which falls on every consumer who is about to buy a car.

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Potential impact on imported cars and domestic luxury brand cars

If we look at cars that offer both imported and domestic models (for example, domestic long wheelbase + imported standard wheelbase), It will be found that the price of imported standard wheelbase models is generally only about 10% to 15% more expensive than the domestic version, which means that reducing the tariff of imported vehicles may affect the luxury brand domestic models ranging from RMB 400,000 to RMB 600,000. Reduced price gap with imported versions, consumers will be more inclined To buy imported models.

Light customs trade | Interpretation of import tariff reduction

For example, the current BMW 5 Series Imported standard wheelbase and domestic long wheelbase version

Therefore, to re-open the gap, luxury brand domestic models in this price range may further reduce prices to maintain the existing price echelon system This means that luxury brands will further sink, affecting the space of joint-venture brands and self-owned brands.It can be said that this tariff adjustment has a far-reaching impact.

The above influence will take quite a long time to appear. The biggest suspense is how much the price of imported cars will be lowered, and when it will be lowered. In July, the imported car market will usher in a wave of sales growth.