Tax Increase Causes Declining Auto Sales Growth in China

  • Monday, 20 March 2017 00:00

China: Auto sales growth in China plunged in the first two months of the year after a sales tax increase.

Sales have dropped from a 9.1 percent growth in December last year, to a 6.3 percent growth from a year ago. Overall vehicle sales, including trucks and buses, increased 8.8 percent to 4.4 million units. This year, China saw sales of 3.8 million automobile units, according to the China Association of Automobile Manufacturers.

The amount of automobile units sold in the country’s auto market increased 15 percent last year following a reduction of sales tax on small-engine vehicles. Previously, the sales tax was at 10 percent, before it was reduced by half. The government restored part of the sales tax in January, raising the tax from five percent to 7.5 percent.

Global brands, as well as newer local brands that depend on China’s market to boost revenue, are feeling the pinch from dwindling sales growth. Forecasters expect sales to grow in mid-single digits this year.

Consumer demand for SUVs, especially lower-priced Chinese brands, helped to balance out poor sedan sales. Families saw SUVs as safe, which accounts for the sales of SUVs rising 21.6 percent and selling 1.4 million units. SUVs account for 40 percent of passenger vehicle sales, with sales by Chinese SUV brands increasing 28.3 percent to 978,000 units.

General Motors Co. said SUVs accounted for nearly half its February sales. Sedan sales rose 3.8 percent to 1.8 million units.

  • General Motors Company said sales had a 0.3 percent gain from a year earlier in February to 246,730. Sales dropped 24 percent in January.
  • Ford Motor Company said sales in January and February fell 21 percent to 153,073. February sales rose two percent to 64,641.
  • Nissan Motor Company, the most popular Japanese brand in China, said sales in January and February rose 3.1 percent from a year earlier to 194,241 vehicles.
  • Toyota Motor Company said sales rose 9.6 percent to 183,600 in the first two months of the year.
  • BMW AG said sales in China of BMW and Mini brand cars rose 14.7 percent in January-February to 92,045.

APMEN News, Mar 2017

 

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