Gasgoo.com (Shanghai May 17) - Leaders of China, Japan and South Korea have agreed to begin discussions regarding a possible trilateral free trade agreement later this year, the Beijing Times reported. If an FTA is decided upon, taxes on several imported products, including automobiles, may decrease sharply.
Such an agreement would be a blessing for Japanese automobile manufacturers, whose export sales have suffered from both the Tohoku earthquake last March and constantly appreciating yen. Toyota, Honda, Nissan, Mazda and Subaru parent Fuji Heavy Industries have even gone as far as jointly requesting to the government to prevent further appreciation of the currency. However, if an FTA with China comes to fruition, a lot of stress will be taken off Japanese manufacturers.
Lexus, Infiniti and Subaru vehicles, along with certain Toyota models, are only available as imports in China. Combined sales of Lexus and Infiniti vehicles currently exceed 80,000 units. If import taxes are decreased or levied, models from these brands will surely become more affordable, aiding their overall sales. Reports have speculated that Lexus and Infiniti sales in 2015 may exceed 200,000 units and 80,000 units, respectively, if FTA rules are implemented.
Korean automobile enterprises, meanwhile, may have less to gain from the agreement. With the exception of the SsangYong SUV, imported Kias and Hyundais have failed to gain widespread popularity in China.
An FTA may also see Japanese and Korean manufacturers more willing to bring over more economy models, which will put even more pressure on local own brand manufacturers. Chinese consumers, meanwhile, will have even more choices to select from.
However, any forecasts ultimately depend on whether or not an actual FTA can be agreed upon.
