Chinese yuan rises to boost profits of imported cars

Shanghai, April 30 (Gasgoo.com) Some car dealers in China are overjoyed at the appreciation of Chinese yuan (renminbi or RMB) against the US dollar. In the daily-changing foreign exchange rates, the profits of imported vehicles and auto parts have been growing appreciably, which gives the dealers huge profits and makes these imported models more competitive in price. A dealer of imported cars said that the profit he can get from a $50,000 car is $4,000 more now than its profit in mid-2007.

According to the country's latest price monitoring statistics from 36 cities, the prices of imported cars have dropped slightly for three straight months. The prices of imported vehicles in March decreased by 0.23% from the previous month and dropped 0.94% year-on-year. The prices of imported sedans in March dropped 0.95% from February.

The profits of imported cars undulate with the changing exchange rates. The enlarging of the profit margins in the imported cars’ prices has also led to some promotional price cuts in China's imported car market. The Hummer H2 and Lexus 350 are now cheaper by 60,000 yuan ($8,600), the GM Saturn by 50,000 yuan, and the Kia Opirus (known as Amanti in the U.S.) is cheaper by nearly 10%. The cars that have recently had their prices marked down are mostly imported from the United States, Japan, and South Korea.

Industry insiders said that the RMB appreciation has comparatively devalued the US dollar, Japanese yen and the Korean won, and this will reduce the cost of exporting the cars of these countries to China. The cost of exporting a $50,000 sedan to the Chinese market has dropped by at least 20% since last year, and the dealers can still increase their profit by a 10% or more even after they have cut the imported car's price by 10%.

The Chinese currency was set to trade at 6.992 yuan against the US dollar on April 10, breaching the 7-yuan mark for the first time since the government unpegged it from the dollar in 2005. The Chinese currency has gained about 18% since 2005 when it had been set at 8.27 yuan to 1 dollar.