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What will incentives bring for the sluggish auto market?

Source: | Date: Nov. 2

  • Figures from the China Association of Automobile Manufacturers (CAAM) indicate that in Sept., the Chinese auto market saw a rise from a five-month consecutive sales drop but auto output kept falling. During the first nine months of 2015, China's auto sales were up 0.3% over the same period of last year, and auto output was down 0.8%. In late Sept., the Chinese government launched a series of market incentives, such as halving the purchase tax on small-displacement cars, to stimulate the sluggish auto market.

  • Insiders agree that it is difficult for the Chinese auto market to achieve fast growth over the next few years as the demand for vehicles falls short of supplies.

  • At the executive meeting on Sept. 29, the State Council announced its plans to step up push for new-energy vehicles (NEVs) and small-displacement vehicles by improving supportive policies. As one of market incentives, the purchase tax on passenger vehicles with a displacement of less than 1.6 liters will be halved from Oct. 1, 2015 to Dec. 31, 2016. One insider says that the tax break will help boost small car sales in the following months to this year.

  • Senior auto analyst Jia Xinguang believes that this new policy will work better in third- and fourth-tier cities, towns, and villages where small-displacement MPVs will become more popular.