NPC and CPPCC interpret manufacturing tax rate cut by 3 percentage points, a new round of car prices is expected to cut by 2.4%.

Source: Xinhua News Agency On the morning of March 5, Premier Li Keqiang delivered a government work report on behalf of the State Council to the Second Session of the Thirteenth National People's Congress. The key points in the automotive field have attracted the attention of all sectors of society, including the reference to "deepening the value-added tax reform, reducing the current tax rate of 16% to 13% in manufacturing and other industries, reducing the current tax rate of 10% to 9% in transportation, construction and other industries, and ensuring that the tax burden of major industries is significantly reduced;" The tax rate of 6% will remain unchanged, but through the adoption of supporting measures such as increasing tax credits for production and domestic services, we will ensure that the tax burden of all industries will only be reduced without any increase, and we will continue to push forward the consolidation of the three tax rates and the simplification of the tax system. " But also triggered a new round of discussion. The implications for the automotive industry of lowering the current 16 per cent tax rate on manufacturing to 13 per cent are worth investigating. A new round of cuts in car prices lights In fact, tax cuts have been good for a long time. Since May 2018, there has been a policy of lowering the value-added tax rate in sectors such as manufacturing from 17 per cent to 16 per cent, and a number of car companies have lowered prices. Luxury brands such as Lincoln, Mercedes-Benz, Jaguar Land Rover and Porsche have adjusted their official retail prices, and a number of models have seen varying degrees of demotion. Mercedes-Benz, for example, saw its Mercedes-AMG models drop more than 32,000 yuan. This round of tax cuts is also seen as a signal for a new round of price cuts. "Car prices will be adjusted with the purchase tax adjustment; this will have an impact on retail prices, prices can effectively stimulate consumer enthusiasm for car purchases, the car market turnaround is guaranteed! "Veteran auto media person" Sang Zhi Wei "think," For the car companies to grasp the account, see how much the guide price adjustment, because each wholesale is tax-free, little impact on dealers. According to last year's calculation, for every point of VAT adjustment, the corresponding guidance price will be adjusted by about 0.8%. " If you adjust by a point of about 0.8, then the reduction of 3 points, which means that the overall price is expected to fall by 2.4%. Relieving Anxiety Caused by Cold Winter In 2018, China's auto market experienced a cold winter for nearly 30 years. Overall passenger car sales reached 23.71 million vehicles, down 4.1% year-on-year. The favorable announcement will alleviate the burden and anxiety of auto companies to a certain extent. "According to Jia Xinguang, a senior analyst in the automotive industry," the current value of the automotive industry is about 3.5 trillion yuan, less 3 percent of the value-added tax, equivalent to 100 billion yuan. The profit of key enterprises in 2017 is about 400 billion yuan, which is equivalent to an increase of 25 percent of the profit. " In the overall downturn in the car market, the state to promote "automobile to the countryside" in the context of car companies will pass on profits to consumers through the price cut is expected to be further realized. In fact, there are many core technologies in automobile enterprises, A lot of them are homemade, The four crafts are all sharp tools for earning money. Some automobile employees have calculated a sum of money, from buying steel plates to selling vehicles. One kilogram of steel plates ranges from 5 yuan to nearly 100 yuan per kilogram sold by the whole vehicle. The value-added part is very high. With the reduction of value-added tax, the profits of automobile enterprises will rise, and this part can be passed on to consumers. But, Liu Ying, deputy director of the Institute of Taxation at the Capital University of Economics and Business, also said that whether VAT can be passed on to consumers ultimately depends on the market demand. If the market does not need certain products, enterprises will be unable to pass VAT on no matter how low the prices are, or they will have to be marketable. The tax burden of marketable products is reduced, from the perspective of the people, the consumption cost is reduced, which may stimulate consumption and demand to a certain extent, thus triggering a favorable impact on production. Boosting Industrial Structure Upgrading Although ten ministries and commissions, including the National Development and Reform Commission, have issued the "Implementation Plan for Further Optimizing Supply, Promoting Steady Growth of Consumption, and Forming a Strong Domestic Market (2019)", Six measures are formulated to promote automobile consumption, including upgrading, structural optimization and regional characteristics.However, the price reduction efforts of major automobile enterprises are not very large, and they are mainly limited to some independent brands, with limited impact. With the VAT cut of three points, a new round of price cuts is expected to open, especially for luxury cars, the extent of price cuts will be greater, which will be a huge push for the market as a whole. In 2018, for example, sales at seven of the 11 luxury brands including BMW, Mercedes-Benz, Audi, Cadillac, Jaguar Land Rover and Lexus rose more than 5% from a year earlier, making it a warm winter for the car market. If the tax cuts, car companies cut prices again, will greatly promote the prosperity of the luxury car market, thus promoting the structure of the car market Upgrade of.