China demands reversal of Türkiye’s additional tariffs on Chinese cars

Recently, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) announced plans to seek compensation for Chinese car manufacturers affected by Türkiye’s additional 40% tariff on vehicles, which will be effective July 8.

In its statement on behalf of the Chinese automotive industry, CCCME emphasized potential reputational and investment losses for these manufacturers due to Türkiye’s policy change.

CCCME expressed concerns over anticipated losses for Chinese brands in Türkiye and requested exemptions from the 40% tariff for vehicles already ordered before the tariff announcement.

CCCME outlined five main demands following Türkiye’s additional tariff:

1. Türkiye should revoke the decision on the additional tariff.
2. Vehicles reserved for shipment to Türkiye before the tariff announcement date (June 8, 2024) should be exempt from the additional tariff.
3. CCCME will assess losses incurred by Chinese automotive manufacturers at Türkiye marketing and service points due to the additional tariff, demanding reasonable compensation for any inability to conduct normal business operations in Türkiye.
4. Acknowledging Türkiye’s discussions with certain Chinese brands on investment projects, CCCME stressed the interdependence of trade and investment environments, advocating against measures that could deter investment.
5. CCCME highlighted ongoing challenges for Chinese electric vehicles affected by new import conditions since November 2023, urging prompt resolution at Türkiye customs.

11 brands sold 40,000 units

In response to Türkiye’s efforts to promote domestic production and protect local markets. However, this has surprisingly led to more Chinese car brands entering the Turkish market.

Currently, 11 Chinese brands including Skywell, MG, Chery, and others operate in Türkiye. Last year, these brands accounted for approximately 60,000 units, constituting 6% of Türkiye’s automotive market. In the first five months of 2024 alone, around 40,000 Chinese vehicles were sold, increasing their market share to 8% for the January-May period.

Potential price increases by 30%

Chinese automakers have traditionally offered significant price advantages in Türkiye, particularly in gasoline and hybrid vehicle segments.

However, with the additional tariff effective from July 8, Chinese brands are expected to lose competitiveness until local production or other adjustments are made.

Consequently, price increases of up to 30% are anticipated, affecting higher-end vehicle segments less severely.

Aim to boost local production

Ministry of Trade, in detailing the tariff adjustment, aimed to bolster the market share and production of domestically manufactured vehicles while incentivizing local investments.

The decision, applicable to conventional and hybrid passenger vehicles classified under Customs Tariff Position 8703 originating from China, imposes an additional tariff based on 40% of the import value or $7,000 per unit, whichever is higher.