China Sept car sales mark first rise in 6 months; dealers eye tax cut

[BEIJING] Vehicle sales in China grew 2.1 per cent in September, snapping a five-month streak of declines, as dealers look to a government tax cut on small cars to revive the world's largest auto market.

China's State Council halved the sales tax on cars with 1.6-litre engines or smaller to 5 per cent from Oct 1 through the end of 2016 in a bid to boost flagging car sales dragged down by the slowest economic growth in 25 years.

September sales rose to 2 million vehicles, contributing to a 0.3 per cent increase for the first nine months of 2015 compared to the same period a year earlier, the China Association of Automobile Manufacturers said at a briefing in Beijing on Tuesday.

Car dealers said they were seeing some limited impact thanks to the policy, although they cautioned this could just be smaller cars accounting for greater proportion of sales rather than overall sales volume increasing. "Almost all cars selling in my store are below 1.6 litre,"said Lan Zhijin, a sales manager at a Geely dealership in Shanxi province.

Foot traffic is up 10 per cent year-on-year, while sales are up 4 per cent, Lan said. "Almost all customers coming in our store will ask about the policy." With consumer sentiment hurt by slowing economic growth, the association said last month there was a chance that auto sales could fall this year, which would mark the first annual decline since the market first took off in the late 1990s.

REUTERS