AUTONEWS

New tax measure in Europe makes vehicles produced in China 226% more expensive

It was with some surprise that the European Union announced that taxes on Chinese vehicles would increase between 17 and 38% upon entry to the Old Continent, as a way of compensating for the illegal aid granted by the Chinese State to its manufacturers. But a Reuters study shows that this penalty, which on paper seems very heavy, runs the risk of not making a dent in the advantage that Chinese manufacturers have in terms of costs, since the same vehicle is sold 226% more expensive in Europe than in China.

At first glance, this considerable price differential, which in the worst case scenario leads to the same vehicle manufactured in China demanding prices from European drivers that are 2.26 times higher than those charged in China, gives Chinese brands a commercial advantage that will be difficult to offset with the new provisional import tax. The rate now fluctuates depending on the brand — and depending on the opening revealed during the investigation carried out by European technicians — between 17% and 38%, instead of the current 10%, which means an increase of only 0.07 to 0. 28 times, far from the slack that, according to Reuters, the Chinese have in terms of costs.

The study by the British news agency gives as an example BYD, as the largest Chinese manufacturer (already represented in Portugal), which sells the Dolphin in China for €15,400, instead of the €34,900 required from German builders — in Portugal it is offered at prices from €35,700 — a price that is 226% higher. Another example is given by Atto 3, which in the Asian country is transacted for 81% to 174% less, when compared to Germany. The same happens with the Seal, the BYD model intended to rival the Tesla Model 3 and BMW i4, which in China is sold for prices between 30% and 136% lower than those charged, on average, in Europe.

Tesla, which produces the Model 3 and Model Y in China in its own factory, being the only Western manufacturer that China has not forced to allocate 50% of its factory to a Chinese brand, only manages an increase of 37% among prices charged in Germany compared to China. The price difference registered by Tesla models is much lower than that of Chinese manufacturers, which fuels the suspicions of the European Union and the USA regarding the illegal subsidies that the Chinese State allegedly grants to local manufacturers.

The North Americans have already come forward (days before the Europeans) with an increase in taxes on vehicles imported from China to 100%, which the European Union has joined, but only with rates between 17% and 38%. However, these taxes are announced as provisional, with definitive ones expected from July 4th, when the conclusions of the investigation launched by European authorities into Chinese commercial practices are revealed. And there are already those who defend an increase in taxes, something that China should not criticize, since since 1994 it has imposed draconian conditions on foreign manufacturers who wanted to sell their vehicles in China, forcing them to build factories in the country and give 50% (or more) to local builders belonging to the State. Comparatively, Europe allows BYD to currently build its factory in Europe, without forcing acceptance from any partner and allowing it to avoid import duties.

by Mundoquatrorodas