2017 could be harder for automakers in China, due to policy changes

china map

Worldwide automakers reported a rise in China sales in 2016 as customers hurried to benefit from a tax cut on small-engine vehicles, however warned 2017 would be harder for the market as the reward is rolled back and the more comprehensive economy slows.

Toyota Motor, Ford Motor and Nissan Motor on Friday have reported sales growth of 8 percent or much better for 2016, although Honda Motor had a 24 percent growth.

Toyota has reported 8.2 percent increase in China sales in 2016, and observes development slowing down in 2017 as somewhat greater taxes keep some purchasers far from the world’s most significant automobile market. It anticipates to sell a minimum of 1.2 million automobiles, constant from 2016.

“We are not being strictly volume focused. We wish to do so (boost volumes) while improving automobile quality and keep our client base pleased with our product or services,” a Beijing-based Toyota representative informed Reuters.

While Honda anticipates to sell more automobiles in China this year, it anticipated a considerably slower development rate of 7.4 percent, approximately in line with a slowing economy.

Demand for vehicles in China had sudden positive effect in 2016 ahead of a prepared expiration of lower taxes at year-end. Sales are going to come under pressure this year, however not fall greatly, given a choice to gradually roll back the incentive instead of quickly ending it.

The purchase tax on cars having engines of 1.6 liters or smaller sized in China, at 5 percent now, will be increased to 7.5 percent this year prior to going back to 10 percent in 2018.

Total passenger car sales in China might have dropped 2 percent this year had the tax cut ended on December 31, however are now anticipated to grow by 3-5 percent, consultancy Automotive Foresight stated.

Experts, nevertheless, warned that vehicle sales might fall in the first quarter as customers fearing the policy would end in 2016 continued their purchases instead of waiting till 2017.

“In late 2016 we certainly saw pull forward impacts in engines below 1.6 liter. This will effect the Q1 adversely,” a sales executive at a significant foreign car manufacturer informed Reuters.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.