European Commission Imposes 20.6% Duty on Chinese Alloy Wheel Imports
On 12 May the European Commission (EC) imposed a 20.6 per cent duty on aluminium road wheels imported from China. The ruling, which is lower than the 30 per cent some sources predicted, is designed to put the brakes on the decline in European produced aluminium wheel sales. It comes in the form of a “preliminary measure” just over half way through the anti-dumping investigation that began at the behest of EUWA (European Wheel Manufacturers Association) in May 2009. The preliminary measure lasts for the six months necessary for the commission to make its final ruling in November at which point the 12 May ruling leaves the option open for commission to the 20.6 per cent import duty for an extra five years.
The EC’s findings, published in the Official Journal of the European Union on 11 May 2010, strenuously backed EUWA’s complaint largely on the grounds of Chinese “State interference in decision concerning the main raw material (aluminium).” According to the ruling, in all of the companies which, for the purposes of the investigation, represented Chinese aluminium wheel manufacturing as a whole, the vast majority of aluminium used for the production of aluminium road wheels is acquired in the Chinese domestic market on the basis of long-term contracts. This fact was critical to the preliminary ruling because these prices are themselves based on figures determined by the State-influenced Shanghai Future Exchange. “In this regard, it has to be noted that the Chinese State has a primary role in the setting of prices of primary aluminium and interferes in the market continuously with a number of tools,” the official report stated.
European Commission Investigation Schedule
Date of initiation
Return questionnaire replies
Return comments on disclosure/PM
Return comments on final disclosure
20 October 2009
12 May 2010
2 June 2010
19 July 2010
12 November 2010
Source: European Commission
Duty not expected to affect consumers
The report denied suggestions that the 20.6 per cent duty would have any effect on consumers due to the sizeable profit margins between distributor and consumer in the aftermarket and the small proportion of cost the duty would add to the overall price of a car.
As far as the OEM side is concerned, the EC’s logic is that alloy road wheels (or ARWs as they are known in European legal jargon) represent about 1 per cent of the cost of a car. A duty of 20 per cent would therefore lead to a cost increase of 0.2 per cent overall. When you put this in the context of European OEMs importing 5 per cent of their wheel needs from Chinese manufacturing sources, the total cost increase in terms of overall car production works out as 5 per cent of 0.2 per cent or 0.01 per cent.”
But even for those car makers which import up to 30 per cent of their alloy wheels from China, “the total cost increase would be 30 per cent of 0.2 per cent – a still minute 0.06 per cent increase,” the report explained.
Furthermore, according to the EC is not uncommon feature for car makers to import alloys at a quarter of their final selling price: “…it is apparently not an uncommon feature that ARWs imported by car makers at a given price (50 euros for arguments’ sake) are sold to the final consumer at the three-to fourfold price (i.e. 200 euros).” And while the initial purchase price for wheel distributors may not be the same, the commission no doubt applies the same logic to the aftermarket sales channel.
The EC concluded that, amongst other factors, Chinese aluminium wheel dumping has caused “significant decrease of production and sales, loss of market share, as well as price depression leading to losses of the EU industry.”
Two Chinese wheel makers singled out for ‘state interference’
The Chinese wheel manufacturers investigated (and which are continuing to be examined) are Baoding Lizhong Wheels Manufacturing Co., Ltd., Zheijiang Wanfeng Auto Wheel Co., Ltd., YHI Manufacturing (Shanghai) Co., Ltd., and CITIC Dicastal Wheel Manufacturing. Baoding Lizhong and Dicastal were singled out for particular criticism in the report: “…State interference in CITIC Dicastal and Baoding is such that it permits circumvention of measures if individual exporters are given different rates of duty in particular having regard to the fact that these two groups have two common joint ventures producing the product concerned.”
The European wheel producers named by the European commission include: Borbet group companies, the Heyes Lemmerz group, OZ, Ronal group, Speedline srl, Mapsa, AEZ and Fracaise de Roues SASV.
Cars using the Chinese wheels investigated in the report include those made by BMW and Renault.