China’s car sales better than expected in June

By Anna Lu | July 11, 2016, Monday |

Online Edition

China’s car sales grew more than expected in June, wrapping up the first half of 2016 on a bullish note, as buyers rushed to enjoy tax cuts for small displacement engine vehicles before their expected expiration date comes at the year end.

Sales of passenger cars and commercial vehicles increased by 14.58 percent in June from a year earlier to 2.07 million units, bringing the combined sales volume so far this year to 12.83 million units, up 8.14 percent on annual basis, the China Association of Automobile Manufacturers said today.

Passenger cars, which make the bulk of China’s vehicle sales, sold 9.23 percent more in the first half of this year, outpacing the targeted 8 percent growth. Zou Tianlong, auto analyst of UBS Securities, said the achievement was partly due to a relatively small base of sales to compare during the same time of last year. The market rebound came in September after the central government cut vehicle purchase taxes for energy-saving vehicles with an engine smaller than 1.6 liters, which accounted for over 70 percent of China’s passenger car sales.

And this incentive has been working its magic to date, and may move many more purchase decisions up from next year when the policy is expected to expire.

“The sales growth will gain higher momentum in the second half of this year, and then wane off,” said Zou.

The policy-driven growth model also applies to the new energy segment. Powered by the government’s subsidies, 170,000 new energy vehicles were sold so far this year, up 127 percent year-on-year. But according to consumer research firm Nielsen’s latest report, new energy car sales growth might slow down in the latter half this year, as the government has cut subsidies and reduced car-purchasing quotas in big cities.

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China’s car sales better than expected in June

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