Luxury car dealers in China still have to face many challenges despite the existence of more than 200,000 very rich Chinese who might buy deluxe foreign cars, according to a business report of China Daily on Saturday.

"The market volume of luxury cars will exceed 16,000 units this year," the English newspaper quoted general manager of Ferrari Maserait ChinaMirko Pietro Bordiga as saying.

"The market is large, because of more than 200,000 rich Chinese with personal assets in excess of 10 million yuan (1.2 million U.S. dollars)," the general manager said on Friday at a car seminar in Shanghai.

But some experts are not too much confident about market prospects for dealers, especially smaller ones, the newspaper said.

Customs duties on import cars will come down to an average of 25 percent on July 1, half the level 10 years ago. Ye it is too early to interpret this as good news for local dealers, the daily said.

Importers are getting worked up about an estimated 60 percent hike in operating costs because of changes in the way they pay duties. A recent appreciation of the Chinese yuan has also added to a profit squeeze among car importers.

According to the experts, the change has pushed up operating costs, business risks and entry barriers for importers. Meanwhile, most small dealers have been wiped off the market since 2005.

Instead of sitting idle, market players including dealers and bonded areas are trying to bend the rules: the car exchange in the Waigaoqiao Bonded Area of Shanghai is helping arrange "gap" loans for cash-strapped dealers, while others are creating new excuses to import cars for "duty-free exhibition" purposes and avoid paying tariffs straight away.

According to the daily, Hong Kong is also a help for large car dealers with offices there. They make Hong Kong their warehouse for imported cars because it is a duty-free port.

Source: Xinhua