Taiwanese vehicle assembler China Motor Corporation (CMC) announced it would delay introduction of new models sourced as completely knocked down (CKD) kits from China – for local assembly – following the introduction of new minimum local content regulations.
Last month, the Ministry of Economic Affairs reintroduced local content requirements for locally assembled having ended restrictions 20 years ago to comply with World Trade Organisation (WTO) regulations.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Under the new rules, CKD vehicles would need to have a minimum local content of 15% in their first year of production, rising to 25% in the second and 35% in the third. Most such vehicles already meet these requirements, supported by a strong local component manufacturing industry.
Taiwan assembled models accounted for half of the almost 480,000 new vehicles sold last year with CBU (assembled) imports originating mostly from Japan, Germany and South Korea. The country does not allow direct imports of CBUs from China.
The new regulations were understood to be aimed mainly at ensuring minimum safety standards while also protecting the component sector. They were also likely to slow the entry of locally assembled vehicles originating from China and also help erode some of the cost advantages of Chinese products.
CMC said last week it was delaying the launch of new Maxus and MG models sourced from SAIC Motor to comply with the new regulations, adding it had already cancelled plans to introduce the Maxus G50 Plus MPV later this year.
CMC vice president Chien Ching-wu told an online investors’ conference: “We are rearranging the introduction of the G50. The government’s new policy has affected our production progress and component imports. Before resuming the import of goods, we have to receive government approval by meeting the first year’s requirement.”
Lai Chih-wei, spokesman for Toyota and Lexus distributor Hotai Motor, said: “Our stance is that we support and will fully comply with the regulations. We were not surprised about the implementation of the new rules in August since the administration had long been talking with local automakers.”
