The Chinese Government has outlined its intent to cut its tariffs on cars imported into the People’s Republic – and the move spells promising news for the UK’s automotive industry. China is the world’s leading market for new cars – and UK manufacturers saw their car exports to China increase by a significant 19.7% in 2017. As China’s economy further opens up, the UK could build on this success.
The lowering of trade barriers isn’t just Chinese whispers
Chinese President Xi Jinping recently attempted to soften his public dispute with US President Donald Trump, recent words from whom have cast the threat of a trade war. Over Twitter, he took issue with China’s unusually high import tariffs of 25%, insisting that they evidenced “stupid trade” and that “China will take down its trade barriers because it is the right thing to do.”
His Chinese opposite number has now pledged to do this as part of a raft of changes aimed at making the People’s Republic more open to international businesses and trade. The situation presents a very enticing opportunity for British automakers like Aston Martin and McLaren, both of which recently revealed lucrative deals with the Chinese market, as This is MONEY.co.uk reported.
A manufacturing sector extending its Asian reach
Even before President Xi’s announcement, there were very promising signs of export growth in a UK car manufacturing market still feeling adverse reverberations of Brexit. Last year, domestic demand for British cars fell by nearly 10%, according to the Society of Motor Manufacturers and Traders (SMMT). However, exports to Asia helped keep manufacturing afloat.
Exports increased by 25.4% to Japan, while the continued popularity of British-made automobiles in China has been bolstered by that country’s warm reception to Jaguar Land Rover’s Velar model. The company has decided to assemble this model at its plant in the West Midlands town of Solihull.
However, the EU still accounts for over half of the UK market’s exports – and exports to the area decreased by slightly above 5% in 2017. This has led SMMT chief executive Mike Hawes to call for “clarity on the transitional arrangements for Brexit”.
An even rosier future beckons for UK automakers
Still, Hawes was positive on the prospect of trade barriers soon being lowered in China, to which UK Prime Minister Theresa May recently paid a trade visit. “It’s encouraging to hear that China is considering reducing import tariffs on cars as this will certainly encourage demand for Britain’s ever-growing range of premium, luxury and sports vehicles,” Hawes commented, as quoted by Autocar.
He added: “China is a crucial bilateral trading partner in terms of materials and components and, with automotive companies in both countries investing heavily in each other’s countries, a strengthened UK-China trading relationship, which respects free and fair trade can only deliver greater dividends.”
If propped up by China, the UK’s automakers could be in a position to fund making even better vehicles – and insurance sourced via a broker like Call Wiser could help UK drivers to afford them.
Do You Have A Vehicle Leasing Question?