China Vehicle Sales Rise 7.7% as Tax Cut Boosts Demand for Cars

  • Passenger car sales climbed 9.3 percent to 2.23 million units
  • Commercial vehicle sales declined 3.4 percent to 303,600 units

China’s vehicle sales rose 7.7 percent last month as demand was spurred by a cut in tax on purchase of small passenger cars and ahead of the Lunar New Year.

Wholesale deliveries of passenger and commercial vehicles climbed to 2.5 million units in January, according to the state-backed China Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3 percent to 2.23 million units, while commercial vehicle sales declined 3.4 percent to 303,600 units, it said.

Auto sales climbed during a period when China’s stocks posted their worst month since October 2008 amid concern of slowing economic expansion and yuan volatility. Last year, a stock market rally first soaked up funds meant for large-ticket purchases then proceeded to depress discretionary spending in the ensuing rout.

There was a rebound in demand after the government in October cut the purchase tax on vehicles. Last month, the association forecast vehicle sales will gain about 6 percent this year, faster than the 4.7 percent pace in 2015.

Sales of passenger vehicles in the world’s biggest auto market may rise in line with or slightly better than the rate of gross domestic product growth this year, Jochem Heizmann, Volkswagen AG’s China chief, said this week. The government is targeting an economic expansion of 6.5 percent to 7 percent in 2016.

Sales in January and February are not typically comparable because of demand ahead of the week-long national lunar new year holiday, which falls on different days each year.

— With assistance by Tian Ying

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