China's Aspiring Porsche, BMW Owners in Sweet Spot for Duty Cut

(Bloomberg) -- Chinese consumers waiting for years to lay their hands on the Porsche sports car or the 7 series from BMW AG may soon be rewarded.

Imported premium cars in the $80,000 to $240,000 range are set to benefit the most from China’s planned reduction in tariffs by about half, said James Roy, a director at luxury consultancy Agility Research and Strategy in Shanghai. That also includes models from Daimler AG’s Mercedes-Benz and Toyota Motor Corp.’s Lexus. A car priced at $100,000 could become more than $10,000 cheaper after the planned duty cut.

China's Aspiring Porsche, BMW Owners in Sweet Spot for Duty Cut

“This is really going to stimulate buying among that growing group of Chinese who are affluent but not wealthy,” Roy said. “They buy a lot of luxury brands and aspire to a high-level lifestyle, but are still conscious of value and can’t afford absolutely everything.”

The move has the potential to stoke car demand among the millions of well-off consumers that China’s economic growth has spawned since the country became a member of the World Trade Organization in 2001. Cheaper cars are unaffected, as they’re manufactured in China. The very top tier of supercars is likely to be little affected, as price isn’t an issue for buyers of such vehicles.

“But a tier below that -- you’re talking about guys who are trading up from a sports car to a Ferrari or Aston Martin -- this is something that will absolutely make that trading up much easier,” Roy said. “There’s going to be a big impact on that segment."

China imported 1.22 million vehicles last year, or about 4.2 percent of the country’s total sales of about 28.9 million automobiles.

To contact Bloomberg News staff for this story: Rachel Chang in Shanghai at wchang98@bloomberg.net, Tian Ying in Beijing at ytian@bloomberg.net.

©2018 Bloomberg L.P.

With assistance from Rachel Chang, Tian Ying