Prices soar in licence drought
China's entry into the World Trade Organisation last December was supposed to bring down prices of imported cars and lead to a surge in imports as consumers switched to better, cheaper foreign models.
Imports rose in the first half of the year but still account for a fraction of the market and prices have soared - due to a black market in import licences that can cost up to 100,000 yuan (about HK$93,700).
Thousands of imported cars are sitting in bonded areas at ports, some of them gathering dust in the open air because there is nowhere to store them.
Figures published yesterday showed that in the first half of the year imports rose 33.6 per cent year on year to 51,890 units, of which 30,026 were passenger cars, an increase of 23.5 per cent.
Prices have risen sharply. A Toyota Camry, which costs 170,000 yuan on arrival at the port, is on sale at 430,000 yuan, an increase of 45,000 yuan from April, while the price of Nissan models had increased more than 20 per cent, the China Economic Times said.
Stocks of imported cars in bonded areas have risen to 25,000, more than double the level of a year ago and some have been sent back because storage is unavailable.
This soaring demand for imported cars has come after China entered the WTO but made no increase in the number of licences to import them, set at 120,000 this year.
This has led to frantic searching for import licences.
As a result, the licence, which has a face value of 10 yuan, has been traded for between 80,000 yuan and 100,000 yuan.
As part of its WTO agreement, China agreed to cut tariffs on imported cars from between 80 per cent and 100 per cent to 25 per cent by 2006.
Another factor has been the rise of the Japanese yen against the dollar, which has pushed the prices of Japanese cars higher.
The biggest beneficiaries of the higher prices have been domestic manufacturers who have enjoyed a bumper year for sales, which rose 29 per cent in the first six months to 1.54 million units.
Makers of smaller models have engaged in fierce price competition.
Given the choice, most Beijing taxi drivers would prefer a Toyota, Nissan or Ford to the domestic models they are given by their companies.
