China July car sales rise on fading tax impact, strong economy

[BEIJING] China's passenger-vehicle sales rose for a third consecutive month in July with General Motors Co and Nissan Motor Co selling more automobiles as the impact of higher sales tax waned.

Retail sales of cars, SUVs and multipurpose vehicles climbed 5.5 per cent to 1.7 million units last month, the China Passenger Car Association said in a statement Tuesday. Deliveries rose 0.6 per cent to 12.5 million units in the first seven months this year, according to the association.

Chinese consumers brought forward car purchases after the government announced it would raise the levy on small-engine cars to 7.5 per cent from 5 per cent from the start of 2017, rolling back a tax cut instituted in 2015. That weighed on demand in the first half, when auto sales dropped for the first time in at least 13 years. The impact started to fade out and is partly offset by discounts automakers and car dealers are offering.

The world's second-largest economy expanded 6.9 per cent in the second quarter, faster than expected, putting the nation on track to meet its growth target this year.

Deliveries of General Motors in China increased 6.3 per cent in July year on year to 287,581 units, thanks to strong demand for its economic Baojun 510 SUV and premium Cadillac cars. Nissan China sales gained 14.2 per cent on year to 104,794 units last month, driven by growth in sales of Sylphy sedans and X-Trail SUVs.

BLOOMBERG