[ET Net News Agency, 23 May 2018] The Ministry of Finance on 22 May announced that
China will lower import tariffs on vehicles and auto parts starting 1 July,
BofA Merrill Lynch believes vehicle manufacturing cost is still competitive in China,
and foreign auto OEMs are unlikely to shift production outside given they have built
assembly lines and comprehensive auto-part supply-chains in the country.
The research house thinks it is not economically viable to shift production outside
China, especially for mid-end products. BofAML highlighted even after President Xi's
speech in April on JV restriction removal and import tariff cuts, BMW continues to discuss
with Greatwall (02333) on Mini manufacturing in China, while VW is likely to form a JV
with SAIC to make Audi cars in China besides its current JV with FAW Group.
After the new tariff is implemented, BofAML believes that some foreign OEMs could cut
the manufacturers' suggested selling price (MSRP) and demand for certain imported models
is likely to grow. (KL)
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23/05/2018 17:35
[I-bank focus]Impact of China's tariff cut moderate - BofAML
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