April 7, 2017 / 7:06 AM / in 4 months

GM China vehicle sales fall in first quarter as tax cut rolled back

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FILE PHOTO: The GM logo is seen at the General Motors Lansing Grand River Assembly Plant in Lansing, Michigan October 26, 2015. Photo taken October 26.Rebecca Cook

BEIJING (Reuters) - U.S. automaker General Motors Co (GM.N) said on Friday its first quarter sales in China fell 5.2 percent compared to the same period a year ago due to a shift in the government's tax policy and Lunar New Year fluctuations.

The decline comes despite a 16 percent year-on-year increase in China sales in March.

Demand for cars in China, the world's largest auto market, got a shot in the arm in 2016 as people rushed to buy before the planned expiration of a tax cut on vehicles with engines of 1.6 liters or below.

That year-end spike could depress auto sales in 2017, GM's China joint venture partner SAIC Motor Corp (600104.SS) said earlier this weak.

The purchase tax on small-engine vehicles rose to 7.5 percent this year from 5 percent last year, after the government revised its outright expiry at the end of 2016. The tax will return to the normal level of 10 percent in 2018.

A GM spokeswoman also cited the earlier Chinese Lunar New Year holiday, which fluctuates between January and February each year, for the drop.

Separately, Nissan Motor Co (7201.T) said on Friday its China sales rose 5.3 percent for the first quarter.

That came a day after Toyota Motor Corp (7203.T) reported a 1.7 percent rise in China sales for the first three months of 2017, and a double-digit increase for Honda Motor Co (7267.T).

Reporting by Jake Spring; Editing by Randy Fabi

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