Last week Xinhua reported that Western car manufacturers have a monopoly on the Chinese luxury car market where manufacturers are unfairly setting prices leading to huge profits from the Chinese market, Xinhua fired the first shot in the battle of the luxury marques, but other media outlets and government bodies are also getting their hands bloody.
Most imported car dealers will tell you that prices are high because of import tax, Rao Da, the chairman of the China Association of Automobile Manufacturers (CAAM) told Chinese media that imported cars only have to pay three kinds of tax: Customs Tax, Consumption Tax and VAT. Rao Da mentioned that cars above 4.0L displacement have a 100% tax, but many of the cars sold in China are far below this level of displacement “During the economic crises, many Western brands relied on China to make huge profits.” he said.
Chinese media say that Western monopolies of the luxury segment is only leaving consumers hurt. One import specialist that Auto.163.com talked to on the matter claimed that brands are making money in two areas, firstly from selling the car at a high price and secondly currency trading, the same specialist also mentioned that imported cars come with imported parts which leaves the end consumer paying all the costs.
The deputy director of the China Automobile Dealers Association Mr Chang Luo Shi confirmed that Chinese prices are far higher than foreign prices, partly because of taxation and partly due to other reasons, but he warned that dealers should move to check their processes to make sure they do not become part of any investigation.
In recent days the all powerful Reform and Development council announced that it would widen its research into the imported auto market to make sure that it is compliant with the Chinese laws on creating monopolies.
Statistics from CAAM reveal that Chinese demand for imported vehicles is down 17.1% over the course of the first 5 months of the year with just 423,900 vehicles being brought into China.