China auto sales up 7.7% last month image

The sales on the world’s biggest auto market rose 7.7 percent in January, as the demand was driven by the lowered tax for small engines.

Sales of passenger and commercial vehicles jumped to 2.5 million units in China last month, according to data released by country’s Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3 percent to 2.23 million units, while commercial vehicle sales declined 3.4 percent to 303,600 units, the body said. The upward pace is seen as a very encouraging one, considering the fact that the Chinese economy is slowing down. However, the government has lately sped up its efforts to support the automotive market by cutting some taxes and also promoting alternative-powered vehicles. The authorities decided in October to lower the purchase tax for new cars from 10 to 5 percent for the vehicles fitted with engines up to 1.6-litre through the end of 2016. There are also plans to give incentives for auto purchased by rural residents, covering also mini-commercial vehicles and light pickup trucks. The association is also optimistic about 2016, forecasting a 6 percent acceleration of vehicle sales this year to more than 26 million units.

In 2015, sales of passenger cars with engines of 1.6-litre or smaller reached 14,508,600 units, up 10.38 percent year on year, higher than the overall growth of the market, accounting for 68.6 percent of the total sales of passenger cars. The association said the contributive degree of the new purchase-tax-halving policy reached 124.6 percent. As a perspective for the whole year, the head of Volkswagen’s local branch, Jochem Heizmann, recently said that he expected China’s total passenger car market to expand in line with, or perhaps even exceed, gross domestic product growth in the world’s second-largest economy. The government is targeting an economic expansion of 6.5 percent to 7 percent in 2016.

Via Bloomberg