Chinese vehicle imports dropped 87% ahead of 40% tariff imposition on vehicles imported from the U.S.

The data from the China Automobile Dealers Association showed that Chinese vehicle imports declined 87 per cent in June YoY to 15,000 vehicles as automakers delayed shipments before tariff cuts on foreign-made vehicles took effect in July.

The data from the Association also showed that overall sales of imported vehicles during the first half of 2018 fell 22 per cent YoY to 451,971 vehicles.  In May, China said it would steeply cut import tariffs for foreign-made automobiles and car parts to 15 per cent from 25 per cent effective July 1.

But in July, after the implantation of U.S. tariffs on imported steel and aluminium, China raised tariffs on vehicles imported from the United States to 40 per cent as a retaliatory measure. Rising trade tensions with Washington affected the automobile industry in China.

"June was the most impacted month," said Wang Cun, director of the China Automobile Dealers Association's import committee.

According to him, many car dealers held back their import orders and decided not to import until July.  China imported 1.25 million vehicles last year, according to data from the China Association of Automobile Manufacturers. 

The tariff cut announcement in May prompted many automakers such as Japan's Toyota Motor Corp. to say at the time that they would look at adjusting their retail prices in China to provide competitive offers to customers.  But companies affected by the higher duties on vehicles imported from the U.S. such as BMW Group and Ford Motor Co. later decided to raise prices on U.S.-produced crossovers and SUVs, which might have an impact on their profitability.