Here’s how Brussels could curb the invasion of Chinese cars in Europe

After unveiling a series of measures and launching an investigation against China, the European Union could increase customs duties for cars from the Middle Kingdom. If nothing has been done yet, this is what a recent study just revealed recommends.

BYD Seal U // Source: Marie Lizak for Frandroid

In recent years, Chinese automobile manufacturers invade Europe, which is obviously very scary for traditional and specialist manufacturers. Some explain that the Old Continent will even become a simple importer of cars from the Middle Kingdom in a few years.

A new anti-invasion measure

Manufacturers are also under pressure, like Tesla, but also Volkswagen, now threatened by BYD which was even the world number 1 in electric at the start of the year. A situation which does not please the European Union at all, which wants to do everything possible to limit the damage on the job market. It is in this context that the latter recently unveiled a series of measures which notably recall the IRA (Inflation Reduction Act) in the USA. The goal ? Encourage manufacturers to produce their cars on the Old Continent.

That’s not all, because Brussels has also opened a major investigation, accusing the Chinese government of subsidize builders to allow them to lower their prices. Competition deemed unfair which does not please the public authorities at all. The latter then want to reform customs, in order to complicate the arrival of Chinese cars on the territory. Thus, the European Commission will begin customs registration of car imports from the Middle Kingdom, which will have an impact on their price.

But that’s not all, because Brussels is also considering increasing customs duties, from the current 10% to 25%. And this with the aim of complicating the arrival of Asian cars here. But according to a recent study published by Rhodium Group, this percentage would still not be sufficient. The latter in fact recommends going much further in order to dissuade Chinese manufacturers, or at least make their lives very complicated.

Relayed by the American site of the CNBCthis study considers that it would be wise to increase customs duties to 55% for vehicles from China. The objective is to reduce the number of cars arriving here, because their price would necessarily increase very significantly. And this while the European Union could consider going up to 30%, which is already particularly high, but undoubtedly not sufficiently dissuasive.

Towards a price increase?

According to the survey, even if manufacturers are subject to such taxes, they will still be able toe make profits on sales of their cars with us. And this is because of the subsidies they would receive from the Chinese government. Which Brussels obviously wants to avoid, while the authors of the study take the example of BYD. According to them, the firm earns only 1,300 euros per Seal U sold in China, and no less than 14,300 euros for the same model on the Old Continent. Vroom had calculated that certain models of Chinese electric cars were sold twice as expensive in Europe as in China.

BYD could further drop its prices, as part of the battle which promises to be more intense, the manufacturer could continue to make profits with customs duties of 30%. Which explains why it would be wise to increase them to 55%. Especially since sales of cars produced in China increased by 8% last January and February compared to the same period in 2023. Be careful, because they do not always come from Chinese brands, since Tesla or even Dacia also produce over there.

For its part, the French government has decided to remove the ecological bonus for vehicles manufactured in China, including the Model 3 as well as the Spring, not to mention the MG4, among others. Which should not dissuade manufacturers from the Middle Kingdom, many of whom still want to try their luck here, like Nio or Xpeng, among others.

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