Photographer: Qilai Shen/Bloomberg

China Car Sales Fall First Time in 11 Months After Tax Hike

  • Geely, GAC buck trend with new sport utility vehicle models
  • Toyota, Nissan deliveries slump as sedan sales decline

A sales hangover and holiday-shortened month combined to send China’s passenger-vehicle sales to their first decline in almost a year, with sedan deliveries bearing the brunt of the slump.

Deliveries fell 9.8 percent last month to 2.12 million units in January, the first decline since February of last year, according to the China Passenger Car Association. The week-long Lunar New Year holiday, which started on Jan. 27 this year, also crimped demand. Showroom traffic slowed last month after consumers bought passenger vehicles at the fastest pace in three years in 2016 to take advantage of a tax cut on small-engine automobiles before it was scaled back.

Demand for sedans waned, weighing on deliveries at Toyota Motor Corp. and Nissan Motor Co. New sport utility vehicle models bolstered demand at Geely Automobile Holdings Ltd. and Guangzhou Automobile Group Co., with both Chinese carmakers reporting more than 28 percent gain in deliveries.

There were five fewer selling days in January because of the Lunar New Year, resulting in a loss of about 15 percent of monthly sales, according to the association. The usual surge in car purchases after companies distribute the year-end bonuses also didn’t happen, while consumers advancing purchases to beat the tax increase also damped demand, the group said.

Deliveries for sport utility vehicles rose 6.9 percent, the only passenger-vehicle category to post an increase, while sedan sales fell 18 percent. Demand for light-commercial vehicles, which are also used as passenger vehicles, plunged 28 percent.

This year may turn out to be a year of reckoning for automakers with the state-backed auto association forecasting a slowdown in sales growth to 5 percent from 13.7 percent in 2016. After halving the sales tax on small-engine cars to 5 percent to boost sales, the government raised the levy to 7.5 percent from the start of the year.

Deliveries of Geely increased 71 percent in January, led by its Boyue sport utility vehicle. While overall sales of SAIC Motor Corp. rose 0.3 percent, deliveries of its self-owned brands including Roewe and Morris Garages soared 71 percent last month.

— With assistance by Yan Zhang

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