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An expected jump in China's auto imports starting in May will put great pressure on carmakers in China, although prices are unlikely to decline sharply, according to analysts.
Jia Xinguang, from the China National Automotive Industry Development and Consulting Corp said on Thursday the up-market car models made in China would be hit the hardest from the new wave of auto imports.
These affected models include the Audi A6 of First Automotive Volkswagen, the Buick sedan of Shanghai General Motors (GM), the Accord of Guangzhou Honda and the Passat of Shanghai Volkswagen, Jia said.
"The auto imports are expected to surge in May from the first two months of this year," Jia told China Daily.
According to Statistics of the China Trading Centre of Automobile Imports, the nation imported 9,500 vehicles during the first two months.
Passenger car imports during the period amounted to 6,100 units, including 1,577 from Japan and 2,258 from Germany, the centre said. Imports of cars with 1.5- to 2.5-litre engines totaled 4,200 units.
Jia predicted total auto imports this year may increase up to 200,000 units from 72,000 last year.
China plans to grant a US$8-billion quota for total auto imports this year, including parts. Last year, the quota was US$1.7 billion.
The Ministry of Foreign Trade and Economic Co-operation said it began to distribute auto import quotas for the year to dealers this month.
After May, "we will see prices of imported cars fall back to the levels in the first two months of this year," Jia said, "but a generally steep drop is unlikely."
Prices of imported cars, especially those of Japan-made models, rebounded in March as a result of a short supply on the domestic market and hefty permission charges on importers.
Ding Hongxiang, the centre's deputy general manager, said the average price of imported cars is expected to decline by more than 20,000 yuan (US$2,420) and become close to the level early this year.
But prices of Toyota's new Camry and Nissan's Cefiro were expected to decrease to around 370,000 yuan (US$44,700) in May from the current 410,000-420,000 yuan (US$49,600-50,800), said dealers in the Beijing Asian Games Village Automobile Exchange.
"Then prices of Japan-made cars will not decline further as the exchange rate of Japanese yen has stopped weakening," Jia added.
Currently, the yen's exchange rate against the US dollar stands at 133:1, compared with 134:1 at the beginning of February.
Consumers would likely choose imported cars if their prices were no more than 20 per cent higher than the similar domestic models, Jia said.
Some local carmakers, prompted by China's sharp tariff cuts, have begun to slash prices of their up-market products.
In January, Shanghai GM lowered the price of their 2.5-litre Buick sedan by 30,000 yuan (US$3,240) to 258,000 yuan (US$31,200).
"There will be a lot of uncertainties on the domestic market this year driven by increasing auto imports," Shanghai GM said on Thursday.
Shanghai Volkswagen also cut the price of one of its Passat model by 10,000 yuan (US$1,210).
On January 1, China cut tariffs on auto imports to 43.8-50.7 per cent from 70-80 per cent. Under obligations of the World Trade Organization, the tariffs will decline to 25 per cent by the middle of 2006.
(China Daily April 5, 2002)
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