Negotiations to replace tariffs on Chinese cars imported into Europe will likely lead to better prices for buyers, industry insiders here believe.
It was recently announced that the EU and China have agreed to start negotiations on setting minimum prices for Chinese cars sold in member states, which would mean the current tariffs would be replaced with a new agreed pricing structure.
An EU spokesperson said its trade commissioner, Maros Sefcovic, spoke with the Chinese Commerce Minister, Wang Wentao, and both sides agreed to look into setting minimum prices.
Currently, the EU imposes significant tariffs on Chinese imports. For example, BYD cars sold in Ireland are subject to a 17% tariff on top of a general 10% tariff. Another major manufacturer importing into Ireland - the SAIC Group, owners of MG - is tariffed at 35.3%, plus the 10% general tariff.
"I have no doubt this is going to be good news for Chinese manufacturers selling in Ireland and it's most likely that this deal would mean they can compete even more keenly. The EU needs China like never before, so China is in a position to drive a very hard bargain", one Irish motor industry source says.
Another pointed to the fact that BYD is completing a large manufacturing plant in Hungary, which is due to come on line at the end of this year. "By manufacturing within Europe, these cars won’t be imported into the EU", said the source.
Chinese companies have managed to stay very competitive in Ireland, despite current tariffs, by absorbing the extra cost of tariffs. For example, BYD recently launched its new Sealion coupe SUV at an entry level price of €45,435. It is competing with Tesla’s Model Y, which starts at €46,990.
According to Reuters, the German auto industry association,VDA, welcomed the talks between the EU and China, calling the current duties a "mistake" and advocating for a negotiated solution.
"Regardless of current global developments, it must also be discussed here how to reduce obstacles and distortions in international trade, rather than building new hurdles," told Reuters.
German carmakers, which made a third of their sales last year in China, opposed the tariffs, worried about a trade conflict with the country's second most important trading partner after the U.S.
