Shares of U.S. automakers increased on Monday following a report that China was thinking about halving its car purchase tax to 5 percent to back its struggling auto industry, which has been hit hard by the Sino-U.S. trade war.
Shares of General Motors, the No.1 U.S. automaker by sales, boosted as much as 5 percent to $34.30, while those of Ford Motor rose about 7 percent. Shares of the two companies have dropped over 20 percent this year.
“From a China perspective, the extension of a purchase benefit (could) help to alleviate some of the trade dispute overhang, and is possibly contributing to stocks performance today,” Consumer Edge Research analyst James Albertine stated.
National Development and Reform Commission of China, the top regulator, has submitted a plan but no decision has been considered, Bloomberg reported, mentioning people familiar with the matter.
The measure would apply to cars with engines no bigger than 1.6 liters, the report noted.
Reuters had earlier noted that the China Automobile Dealers Association (CADA) had filed documents to the country’s finance and commerce ministries, proposing the auto purchase tax be halved.
The European auto stocks index .SXAP also increased after the report and was set for its best day in almost 4 months.
BMW, Volkswagen AG and Daimler AG gained between 4.3 pct and 4.9 pct.
Auto part makers Aptiv, Delphi Technologies, BorgWarner, Visteon Corp, Goodyear Tire & Rubber, all increased between 5 and 8 percent.
Separately Goldman Sachs upgraded Ford to “buy”, mentioning the company’s refreshed product lines worldwide and cost savings from strategic initiatives.
