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Incentives to boost vehicle purchases

BACKED by government stimulus policies, China's vehicle sales this year are forecast to accelerate 17 percent from 2008 to exceed 11 million units, according to the China Passenger Car Association.

The jump in sales will outpace the 6.7 percent increase last year, the slowest pace for at least three years, as the association predicted government incentives will trigger a sales peak later this year.

The central government has halved the purchase tax on small cars with engine capacities of 1.6 liters or below and granted 5 billion yuan (US$733 million) in subsidies to spur demand in rural areas.

"The sales of vehicles have reached a new high in the off season, indicating a strong recovery in the auto market, and the government incentives will give a boost in the latter half of this year to spur sales further," the association said in a report yesterday.

Vehicle sales including cars and trucks rose 25 percent year-on-year to 1.15 million units in April for the fourth consecutive month, according to an earlier report.

The sales of passenger sedans including cars, sport-utility vehicles and multi-purpose vehicles jumped by a faster-than-expected 54.7 percent last month to 812,178 units.

Shanghai also has a plan to subsidize owners who switch from their heavily polluting cars to more environmentally friendly vehicles.


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