"Luxury car prices may drop significantly in the future." On December 20, an imported luxury car dealer told reporters.

The car dealer’s judgment came from an international trade dispute last week. On December 15, the WTO final ruling ruled that China’s auto parts import measures violated the regulations.

So how did this ruling come about and how will it affect the domestic auto market?

Playback: Why China was Murdered

The key to disputes lies in the "Administrative Measures for the Import of Auto Parts That Constitute the Characteristics of the Vehicles" that China implemented from April 1, 2005, which stipulates that the imported parts that equal or exceed 60% of the value of the entire vehicle are collected in the same way as the entire vehicle. The tariff is 25%; while the import tariff for parts and components is 10%, a difference of 15% between the two.

The United States, the European Union, and Canada believe that the above tariff regulation reduces the cost of auto parts makers' transfer of production to China, resulting in the loss of jobs in the United States, Canada, and Europe.

Officials from the Ministry of Commerce of China pointed out that the “measures” were implemented to prevent lawbreakers from using the tax difference between vehicles and parts to evade tariffs.

Since November 2005, Canada, the European Union, and the United States have successively appealed to the WTO. On February 13, 2008, the WTO ruled for the first time that China violated the trade rules, and then China appealed. On December 15, the final decision of the WTO Appellate Body held that China’s practices violated WTO rules.

According to the WTO agreement, this also means that China will only accept such results and make adjustments after 30 days. According to WTO rules, once a judgment is issued, if China refuses to change the relevant policies, the appealing country and region will have the right to impose sanctions on China.

influences

Imported car prices have changed little

If China changes the relevant regulations according to the requirements of the ruling, what are the prices of imported cars?

Since the import vehicle tariff is not within the ruling, the tax is still levied on a 25% basis. Therefore, the price of imported cars will remain unchanged.

“There are very few imported cars. Most of the models can basically be produced in China. After China makes tariff adjustments on parts and components, there will be fewer original imported cars.” An import car dealer told reporters.

It is understood that in addition to the world-renowned high-end luxury car brands such as Porsche, Ferrari, Maserati, and Land Rover, which are still imported, other low-end luxury cars have basically reached the requirements for production in China, and are installed by joint ventures. The production line can quickly assemble the imported parts into a imported car.

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Domestic luxury car prices may decline

"The domestic Mercedes-Benz and BMW will be directly affected." Jia Xinguang, a well-known automotive analyst, said: "Because the domestic auto parts companies cannot meet the requirements for luxury models, the current localization rates of Mercedes-Benz and BMW are very difficult. It reached 40%. Therefore, the WTO ruled that the Chinese government would cancel the threshold for localization, which is good news for luxury brands."

Due to the short time of the joint venture and the high quality requirements of the brand, parts of the joint venture high-end models such as BMW, Mercedes-Benz and Volvo are imported. The appeal failed and they will be the biggest beneficiaries. For example, reducing its cost in the purchasing tax rate will also accelerate the localization of high-end models, which means that domestic BMW, Mercedes-Benz, Volvo and other vehicles will generate 15% of direct profits.

When interviewed by car companies such as BMW Brilliance and Beijing Benz, they all said that it will take time to assess the changes brought about by this incident. However, they also pointed out that if the production costs of these depots can be effectively reduced, the possibility of the price reduction of the above high-end models cannot be ruled out.

High-end car prices are forced to go down

"If the price of homemade BMW and Mercedes-Benz parts drops by 15%, it can be seen intuitively that the prices of domestically produced BMWs and Mercedes-Benz can directly drop by 15%." Some industry insiders have analyzed.

At present, the price of the BMW 3 Series has been reduced to around 300,000. If the price drops by 15%, it will only sell to about 250,000, which is equivalent to the mid-size cars that currently sell for between 180,000 to 250,000 and about 300,000. The suppressing effect of high-end cars will be very obvious. After all, BMW's brand effect and influence are obvious to all. Under such circumstances, Audi, Honda, Camry and other models with high localization rates will all be affected, and it is very likely that they will be forced to lower prices again.

The relevant person of FAW-Volkswagen manufacturers said that although we have not yet seen the direct impact, we must make preparations as soon as possible. It is understood that for several years, affected by the domestic production of BMW and Mercedes-Benz, the price of the Audi A6 has been continuously falling, and it has been down to 300,000 or so. Before the BMW and Mercedes-Benz did not enter China, the high-end auto market in China, Audi's out-and-out China, was at a high price.

According to the latest news, the price of the Volvo S40 produced in China dropped by another 40,000 yuan, and it has fallen below 270,000 yuan.

Limited impact on economy cars

"About 100,000 economic cars are very limited by this policy." A Peugeot 307 dealer told reporters.

Dongfeng Visteon provided parts and components for many models of Dongfeng Shenlong Motors, including Peugeot 307. Visteon’s public relations manager Feng Yingzhao told reporters that Visteon and other world-renowned spare parts suppliers have basically achieved localization strategies in China, and in the last three years The competition of the joint venture depot has been very fierce. In order to control the cost of the supply chain, almost all local components and parts suppliers are selected. Therefore, the high localization component companies will not be affected.

If the cost of parts and components remains the same, it is clear that the price of the finished product will not be affected if it is passed to the vehicle manufacturer. According to industry analysts, the prices of economic vehicles are more restricted by the market, and the impact on the parts and components dispute can be negligible.

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Industry reviews

Loss on paper has not hindered the growth of China's auto industry

After two years of negotiations, investigations, preliminary rulings, and appeals, China and the European Union, the United States, and Canada lodged the final adjudication of the WTO Appellate Body on the 15th day of the dispute over China’s "Administrative Measures for the Import of Auto Parts that Constitute the Characteristics of Complete Vehicles." According to this final ruling, the WTO Appellate Body supported China’s appeal request in terms of import tariffs on CKD/SKD, and corrected the previous erroneous ruling of the Group of Experts, but maintained the WTO Expert Group. Previously, it was believed that the Chinese practice constituted discrimination and violated the national treatment ruling.

This is also the first time after China's accession to the WTO lost the lawsuit.

In accordance with relevant procedures, this ruling report will be approved and entered into force by the WTO Dispute Settlement Body within 30 days; China must correct the violations within a certain period of time after the verdict comes into effect. The deadline will be determined through negotiation between the parties or by WTO arbitration. So, how did China lose or lose in the first "single fight" in the WTO?

There is no doubt that we have lost out from the verdict of paper. However, judging from the ultimate goal of the industrial development policy, the "lost lawsuit" lawsuit on the paper still has value. The basis for such judgments lies in the real purpose that China should use to rationalize the use of the WTO rules, namely to develop advanced manufacturing industries that are still childish industries in the country.

Unlike the United States and Europe, in the foreseeable period, China is still not enough to play the most favorable role for rule-makers in the multilateral trading system. Therefore, the goal that we can pursue must be followed by the following: that is, the rational use of international rules. To achieve the purpose of upgrading the industrial structure and the country’s position in the international economic system. As far as the disputes concerning the auto parts trade are concerned, at the beginning of the dispute, we faced the choice between bilateral channels for resolving disputes and resorting to the WTO. If you are worried about losing the WTO and trying your best to seek a bilateral channel to resolve the dispute, you will give opponents the opportunity to contain us, which is not conducive to realizing our actual interests. If we finally resort to the WTO Dispute Settlement Mechanism, we may win or lose the case; if we end up losing the lawsuit due to the unfamiliarity with the relevant laws, we will lose our lawsuit and the lengthy litigation process will already be sufficient for many domestic auto parts manufacturers to grow. Woke up.

As far as this auto parts dispute is concerned, as long as the years of disputes have achieved a faster growth in the export of auto products than in imports, an increase in the import of auto vehicles faster than the increase in auto parts imports, and the export of auto products has reached a considerable scale. It is impossible to reduce sharply. Then our ultimate goal has been achieved. Here, the reason why the goal of "increasing the import of auto vehicles faster than the growth of auto parts imports" is because we originally formulated the concept of "characterized parts and components for complete vehicles" in order to curb that the importers would have become almost complete vehicles. The so-called “parts and components” are imported at the low tax rates for imported parts and components, evading our country’s tariff control measures. Therefore, if the growth of auto vehicle imports grows faster than that of parts and components imports, then there will be fewer importers playing with such tricks.

So, in this dispute, have we achieved our goal? From the 2005-2007 data on the import and export of automotive products, we have achieved our goal at least to a certain extent, that is, the export of automotive products has grown faster than With the increase in imports, the growth of auto vehicle imports grew faster than that of auto parts.

According to customs statistics, in 2006, China’s auto exports increased by 87.4%, import value increased by 41.0% and 47.2% respectively, chassis export value increased by 7%, import value decreased by 41.7%, and auto parts export volume increased by 34.9%. Imports grew by 34.3%; regardless of the type of automotive products, exports grew faster than imports, and the increase in vehicle imports was 12.9 percentage points higher than the increase in component imports.

In 2007, China's auto vehicle exports increased by 113.2%, while imports increased by 45.2%. Exports grew far faster than imports. Auto parts exports increased by 38.3% to US$ 12.27721 billion, and imports increased by 17.8% to 106.4249. Billion US dollars, not only export growth rate higher than the import increase, but also to achieve a favorable balance of auto parts trade; the same time, the increase in the amount of imports of vehicles than the increase in component imports 27.4 percentage points higher.

This year, the export value of China's auto products continued to grow rapidly, and the major auto manufacturers in the United States and Europe have already been in trouble. The three major auto companies in the United States are desperately seeking assistance from the government. In particular, two companies, General Motors and Chrysler, are on the brink of bankruptcy. Some of their brands have already Become a prey for overseas buyers including Chinese manufacturers. For them, how to get a bailout plan in Congress is much more important than passing the ruling of the WTO. They have been unable to effectively organize large-scale production to hit China's domestic market.

Since this is the case, how much weight do we have on paper must be overestimated?

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Media perspective

What are the consequences of China’s losing suits in spare parts trade disputes?

On December 15, the WTO Appellate Body issued a final ruling on the United States, the European Union, and Canada v. China auto parts import management measures. The ruling upheld the conclusion that the dispute resolution agency believed that China’s practices violated the WTO rules. China is here on this occasion. Lost in trade disputes.

The sincerity of China's opening up of the auto market is obvious to all over the world. The import tariff of the whole vehicle exceeds 100% from the highest, and it has dropped to 25% in 2006, and the import tariffs for parts and components have dropped to 10%. On the one hand, China has completely fulfilled its WTO commitments; on the other hand, it is an indisputable fact that joint venture brands account for more than 70% of the Chinese market.

Even so, some countries have persisted. China's measures aimed at combating tax evasion have been criticized as trade protectionist policies and eventually China has lost. It can be said that the decision of the WTO Appellate Body is obviously unfair to China and may bring about a series of adverse consequences.

When the European and American markets were severely declining and many auto giants encountered difficulties, many multinational car companies publicly acknowledged that the Chinese market is the fastest growing market and the most profitable source of growth for them.

When the Chinese market became the "life-saving straw" of some auto giants, its open sincerity has been questioned and unfairly treated.

Openness and cooperation should be mutual, equal, and fair.

Of course, China’s loss of this case may bring about a series of adverse consequences.

First, the import of parts and components that make up the characteristics of the entire vehicle may increase rapidly. Some companies may bypass the policy and openly evade the tariff.

Secondly, the winds of CKD and SKD may again spread, seriously impacting the domestic auto industry and suppressing the living space of domestic auto manufacturers and component manufacturers.

Third, some high-end models are expected to further reduce prices, impact the domestic market, and suppress the upgrade efforts of independent brands. Independent brands may not always build low-end vehicles. When independent brands work toward high-end, there is a very cheap KD. The car is waiting.

Fourth, some joint ventures can easily produce new cars, their desire for “independent” efforts will be further reduced, and China’s desire to open up the market for technology will further fall.

Fifth, it is not conducive to the growth of local parts and components companies. It may be rejected by the joint venture brand procurement system, and technological upgrading will further slow down.

Sixth, there are currently some views that except for the localization of BMW and Mercedes-Benz, the loss of the lawsuit will have little impact on other brands. Such views are somewhat partial. Looking at the new car production plan of the joint venture company in 2009, we will know that a large number of new models, including mid-to-high-end models, will enter China. Originally affected by this policy, some companies may have to spend some time to put into production high-end models in China. Or to pay a higher price, once there is no such "constraint", the pace of production will be greatly accelerated.

Seventh, domestic consumers prefer the so-called “original import”. In the future, some companies can play this card, which will not only impact their own brands, but will even affect other joint ventures that are trying to increase the localization rate.

Eighth, the Chinese government will not rule out new measures and the game will continue.

In short, the loss of China’s lawsuit in this case has been harmful to the Chinese auto industry.

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