Car manufacturers have come out to calm investors, arguing the negative impact of the country's impending entry to the World Trade Organisation on their industries has been exaggerated. The move helped to stabilise share prices, which plunged on Tuesday on news the industry will cut tariffs from the existing 80-100 per cent to 25 per cent by 2006. Shanghai Automotive Industry - the listed arm of the country's biggest car group of the same name - saw its price rise 0.46 per cent to end at 10.85 yuan after general manager You Shiliang said the cuts would hurt the industry but would not be as 'severe as we had imagined'. The corporation operates two joint ventures - one with General Motors, and a hugely-profitable one with the German Volkswagen Group. Mainland media quoted Mr You as saying the tariff cuts would be phased in over seven years, and even when they were down to 25 per cent, mainland-made cars could still be price competitive. He said a Santana sedan produced by the company retailed at 118,000 yuan (about HK$110,000), against 77,000 yuan abroad. Taking into account an average 5 per cent consumption tax, import tariffs of 25 per cent and value-added tax of 17 per cent and other extra warehousing and distribution costs, an imported Santana would cost at least as much as a domestic-made sedan. 'Based on these calculations, the price advantage of an imported car is not significant, and there is no need for us to cut sharply the price of home-made cars,' Mr You said. Earlier projects said WTO entry would destroy more than 120 mainland car factories, which are fragmented and inefficient, but protected by local governments. Last year, the mainland produced 1.6 million cars, fewer than any of the world's top 10 car-makers. Toyota, Japan's largest car-maker and the world's third-biggest made 5.3 million vehicles last year. First Automotive Works Jinbei general manager Zhan Wanjin said his company had been preparing for WTO entry for some time, upgrading its technology and management skills, with an eye on overseas export markets, particularly those in South America and South Africa. 'Based on demand in the international market, we are trying to explore greater openings of the export market for ourselves,' he said. A Tianjin Automobile spokesman said: 'We have about five to six years to prepare ourselves for full competition and will focus on product development, training of technical staff, and technology co-operation with Toyota.' ChangAn Automobile company secretary Yan Changyun said accession would hurt its production of mini-cars and mini-vans, but it would minimise the impact. CARS
