The head of Volkswagen AG’s China operations stated a prepared expiry of tax breaks for little engine automobiles would hit its sales in the nation next year, including that the car industry was eager to see an extension of the procedure.
During October 2015, China cut sales taxes by half on automobiles with engines of 1.6 liters or less, a strong sector for Volkswagen, in a relocation to help promote the vehicle market. That tax cut would expire by the end of 2016.
Assisted by the tax cuts and signs that economic development was not slowing as much as feared, deliveries for Volkswagen in China grew 6.8 percent in the very first half after dropping 3.4 percent during the last year.
“If the federal government truly stays on the present decision that this will be greatly stopped at the end of this year, you can expect pre-sales this year, with a larger unfavorable effect the first quarter of next year,” said China CEO Jochem Heizmann.
“But let’s see if this truly remains this way.”
Industry body China Association of Automobile Manufacturers (CAAM) stated in June it preferred making the tax cut permanent to promote fuel-efficient automobiles.
“Of course we are talking with the government, with CAAM. Everyone does see this danger so this is exactly what I’m stating that hopefully things will change,” Heizmann included.
The German automaker has actually lagged the general market, which grew 8.1 percent in the very half of the year, as per CAAM.
Heizmann stated development in the country’s vehicle market was expected to moderate in the 2nd half after having outpaced projections in the first half.
