The Chinese automotive market took a massive hit ahead of the government’s import tariffs coming into force. Automakers delayed shipments of their cars to the Far Eastern country in a bid to minimise damages inflicted upon them by the import norms. 

Car imports in China in the month of June fell by 87.1% year-on-year. Only 15,000 vehicles were offloaded before manufacturers put the imports on hold in anticipation of the tariff cuts on foreign-made vehicles. Data gathered from China Automobile Dealers Association (CADA) also showed falling faith in imported cars. Chinese local media reported that sales of foreign-made vehicles in the first half of 2018 slumped by 22.1% over the previous year with 451,971 vehicles leaving dealerships.

China announced in May this year that it would cut tariffs imposed on foreign-made cars and car parts to 15% from the current 25% with effect from July 1. However, in a surprise move, the country steeply raised import tariffs only for vehicles that are manufactured in the U.S. and imported. The new imposition for U.S.-made vehicles stands at 40%, with Beijing taking this decision amidst rising trade tensions with Washington.

Companies like BMW AG and Ford are the most affected due to their range of SUVs being imported from the U.S., on which China has levied the highest tariff.

Wang Cun, Director of CADA’s import committee noted that June was the most impacted month for automakers trying to import cars manufactured overseas. “Many car dealers held back their import orders and decided not to import until July 1,” he further added. China imported 1.25 million in 2017, according to statistics of China Association of Automobile Manufacturers.

On the back of the tariff cuts announced in May, companies such as Toyota Motor Corp said at the time that they would look at adjusting the retail prices of their cars in China to provide competitive offers to customers. On the other hand, manufacturers that attracted higher duties for their vehicles built in the U.S. like BMW and Ford decided to absorb the profitability hit instead of hiking the prices of their SUVs and crossovers.