China auto sales to increase 5 percent this year due to tax cut reduction

by SpeedLux
china map

China’s vehicle sales leapt 13.7 percent in last year, the fastest rate in three years, because of a tax cut on small-engine vehicles however growth is anticipated to slow this year as the incentive is decreased.

China’s automobile market, the world’s largest, grew to 28 million automobiles in last year and will probably climb up 5 percent in 2017 to 29.4 million automobiles, the China Association of Automobile Manufacturers stated on Thursday.

Because of tax rewards and other factors, “regular monthly sales clearly grew year-on-year for each month with the exception of February, with cumulative sales and production growing in a straight line,” stated Chen Shihua, a spokesperson for the association.

The sales tax on automobiles with engines of 1.6 liters or below was cut to 5 percent from 10 percent in 2015, providing the car industry a much-needed positive sign as the economy slowed.

The tax will increase to 7.5 percent for 2017, prior to returning to 10 percent next year.

Experts and industry insiders have noted that a preliminary strategy to enable the policy to expire outright on December 31 led many customers to rush to purchase automobiles in 2016, pulling forward sales and harming potential customers for this year’s growth.

Sales of electrical and plug-in hybrid vehicles, which increased 53 percent to 507,000 units in 2016, might also relieve this year because aids for automobile sales in the sector are cut by a 5th, part of an effort to wean car manufacturers off the payouts by 2020.

The sport-utility vehicle (SUV) and multi-purpose vehicle (MPV) segments, which proliferated in 2016, are anticipated to be an intense area this year as entire growth slows, as per the market association.

Honda Motor surpassed its major competitors in China last year with a 24 percent rise in sales, mainly due to a fresh models in the SUV sector.

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