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Tax may be cut as subsidies studied
CHINA is considering reducing or abolishing a purchase tax while giving financial subsidies to new energy vehicles as part of its commitment to encourage the usage of such vehicles, according to government officials.
"The adjustment on taxation could be one of the most effective measures to boost vehicle sales if the slowdown continues," said Dong Jianping, deputy secretary general of the China Association of Automobile Manufacturers, in Shanghai.
Several Chinese car makers, including Guangzhou Automobile Industrial Corp and Geely Automobile Co, have called for government support after vehicle sales slowed in the second half of this year in reaction to the global economic crunch.
Dong said a proposal has been submitted to the State Council, China's Cabinet, after soliciting opinions from car makers, and the cut in the purchase tax would also depend on engine capacity to promote the usage of small cars.
Wang Xia, vice chairman of the Automotive Industry Branch of the China International Trade Promotion Association, also said the Ministry of Commerce is studying plans to offer financial subsidies to eco-friendly vehicles.
"The purchase incentives on new energy vehicles will come out very soon," said Wang without further details.
Analysts said the measures will be fully in line with the government's determination to support the domestic auto industry as it pledged to maintain stable economic growth next year via increased domestic consumption.
"Vehicle sales could be boosted as a moderate loose monetary policy will increase car loans," said Yale Zhang, an analyst from auto consultancy CSM Asia Corp. "In a broad picture, government stimulus plans deliver confidence to consumers and companies, and they will benefit from spending on big-money items such as autos."
Growth in both vehicle production and sales on the Chinese mainland fell below 10 percent in the first 11 months of this year, the first time since 2006, CAAM said yesterday. Between January and last month, China produced 8.7 million vehicles, up 7.98 percent on the same period last year, and sold 8.63 million, up 8.52 percent.
"The adjustment on taxation could be one of the most effective measures to boost vehicle sales if the slowdown continues," said Dong Jianping, deputy secretary general of the China Association of Automobile Manufacturers, in Shanghai.
Several Chinese car makers, including Guangzhou Automobile Industrial Corp and Geely Automobile Co, have called for government support after vehicle sales slowed in the second half of this year in reaction to the global economic crunch.
Dong said a proposal has been submitted to the State Council, China's Cabinet, after soliciting opinions from car makers, and the cut in the purchase tax would also depend on engine capacity to promote the usage of small cars.
Wang Xia, vice chairman of the Automotive Industry Branch of the China International Trade Promotion Association, also said the Ministry of Commerce is studying plans to offer financial subsidies to eco-friendly vehicles.
"The purchase incentives on new energy vehicles will come out very soon," said Wang without further details.
Analysts said the measures will be fully in line with the government's determination to support the domestic auto industry as it pledged to maintain stable economic growth next year via increased domestic consumption.
"Vehicle sales could be boosted as a moderate loose monetary policy will increase car loans," said Yale Zhang, an analyst from auto consultancy CSM Asia Corp. "In a broad picture, government stimulus plans deliver confidence to consumers and companies, and they will benefit from spending on big-money items such as autos."
Growth in both vehicle production and sales on the Chinese mainland fell below 10 percent in the first 11 months of this year, the first time since 2006, CAAM said yesterday. Between January and last month, China produced 8.7 million vehicles, up 7.98 percent on the same period last year, and sold 8.63 million, up 8.52 percent.
