Stimulus policies to promote automotive sales next year

• Source: Global Times
• [08:04 October 21 2009]
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Lang noted that a multi-layered purchase tax would most probably replace the present policy.

Purchase tax for 1.6 liters or less cars have been halved since the beginning of the year to encourage the purchase of environmentally-friendly vehicles. The policy has served as a major driving force in the promotion of domestic auto sales.

In the first nine months of the year, 69.89 percent of passenger vehicles sold in China were 1.6-liter or less. More than 5.06 million units of the fuel-efficient vehicles were sold during the same period, up 60.43 percent from a year earlier.

It appears that the tax breaks are having the desired effect. While sales of the environmentally-friendly cars have taken off since early this year, high emission vehicle sales continued dropping until there was a slight bounce back in August.

Analysts believe that the car bonanza will not stop anytime soon. Sinotrust's Lang predicted a 15 percent increase of auto sales in China next year.

Zeng Zhiling, senior auto market analyst with Shanghai-based Global Insight, struck a similar note.

"Purchase taxes for vehicles that produce low emissions will possibly be still lower than those that spew high emissions [next year]," Zeng told the Global Times.

The auto market has considerable growth potential, said Lang, adding China only has 50 vehicles per thousand people, compared with 800 in the US and 500 to 600 in Europe.