Fleet News

Cheaper cars on the horizon

Fleets could benefit from cheaper cars after the World Trade Organisation’s (WTO) seven-year-old Doha Development Round entered the final phase of negotiations, with the elimination of import duties on cars and vans high on the agenda.

This could substantially reduce car manufacturers’ costs and, depending upon the negotiating skills of end users such as lease companies, these savings should be passed down the line to fleets.

The price cuts could also help offset anticipated increases in the cost of new cars brought about by the imposition of fines for manufacturers who fail to meet emission targets that come into force in 2012 (Fleet News, February 21, page 9).

The deal effects cars imported in and out of the EU, which is considered one country by the WTO.

However, there is no guarantee that sufficient critical mass will be secured – importing and exporting countries signing up must account for 99% of world trade in automobiles.

Even if this is not achieved, the final draft deal issued this month includes a formula for significantly reducing import duties covering all industrial goods, including cars, car parts and fuel.

Assuming the talks finish as planned this year, these import tax reductions are almost certain to come into force by 2010.

Although the final reduction figure has not yet been agreed, the range of cuts being debated is dramatic.

For example, cases where import duty is charged at100%, that rate could come down to 7.4%.

The weakest cut so far under discussion for developed countries would be 10% down to 5% - which is still a significant 50% reduction.

The special automobile sectoral negotiation chairperson Don Stephenson said: “A lot of the architecture for the various modalities are agreed or close enough that I would risk proposing them. That’s real progress.”

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