China: initial sales figures for October indicate strong rebound thanks to tax cut

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Following the central government’s decision to cut in half the tax for certain passenger vehicle acquisitions in the beginning of the month, October’s retail auto sales jumped during the first two weeks of the month. According to figures coming from state-backed China Passenger Car Association, average daily retail deliveries grew 12 percent year over year during October 1 and 16, with the second week of the month posting the highest rate for the period in half a decade, according to a statement released by the industry group on Wednesday. “The effect of the tax reduction has been outstanding,” comments Cui Dongshu, the auto association’s secretary general. “We expect the gains to be sustained for the rest of the month.” The increase in demand has followed the announcement of support measures at the end of September, lobbied by the state backed association as the country is going through a rough economic period. China last used such steps to raise demand during the global financial crisis, when the subsidies supported the country’s emergence as the world’s largest auto market – ahead of the United States. Chinese authorities decided to lower the purchase tax from 10 to 5 percent for the vehicles using engines 1.6 liters or smaller from October through the end of 2016. The central government also forced local authorities to allow unrestricted purchase and operation of electric vehicles and restated support for new-energy vehicles, their term for plug in hybrids and electric cars, both battery and fuel cell powered. Via Bloomberg