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UPDATE 2-China Jan vehicle sales flatline as tax hike, holiday season hit
February 13, 2017 / 7:02 AM / 10 months ago

UPDATE 2-China Jan vehicle sales flatline as tax hike, holiday season hit

* Jan vehicle sales edge up 0.2 pct y/y

* Weakest growth in almost a year

* Hit by tax cut rollback, new year holiday

* Jan NEV sales down 74.4 pct y/y (Adds official comments and details on NEV sales)

BEIJING, Feb 13 (Reuters) - China vehicles sales in January grew at their slowest pace in almost a year, an industry association said on Monday, as a tax cut on small-engine vehicles was rolled back and the Lunar New Year holidays weighed on demand.

Auto sales in China, the world’s largest car market, edged up 0.2 percent in January from a year earlier to 2.52 million vehicles, the China Association of Automobile Manufacturers (CAAM) said, the weakest since February 2016.

That compares with a 9.5 percent increase in December and a 16.6 percent rise in November.

Chen Shihua, a CAAM spokesman, told reporters in Beijing the national holiday period and a decision to raise taxes on small-engine vehicles had hit monthly sales.

Global automakers reported a slower rate of sales in China in January, citing fewer working days with the Lunar New Year holidays and tax hike on cars with engines of 1.6 litres or below.

“Many Chinese consumers in anticipation of a tax hike had placed their car orders by 2016-end,” said Jing Yang, Shanghai-based analyst at Fitch Ratings.

Last month, the association said it expects China vehicle sales to grow 5 percent in 2017, a marked slowdown from a 13.7 percent rise last year, which was supported by a deeper tax cut on small-engine cars.


Sales growth for battery electric and plug-in hybrid cars also plunged in January as Beijing requires all automakers to re-apply for their models to receive subsidies under a stricter regime following allegations of subsidy cheating.

There was a steep 74.4 percent fall in sales of new energy vehicles (NEVs) in January, compared with a rise of 53 percent last year, according to CAAM. China NEVs sales are likely to be between 700,000 vehicles and 800,000 vehicles this year, it added.

Last month, China released a list of “recommended” green energy vehicles, paving the way for 185 car models to receive government subsidies. Beijing published five lists last year, giving the green light to 2,193 car models.

“Factory owners can’t sell cars they have now as they are not on the list, and are worried they won’t get the subsidies either,” said Xu Haidong, CAAM’s assistant secretary general.

“This has had an impact on new energy vehicles’ sales and is the reason behind the big drop-off.”

Beijing has spent billions of dollars to promote electric and plug-in hybrid cars to help the domestic auto industry take on global rivals. (Reporting by Qiu Yifan and Jake Spring; Writing by Adam Jourdan; Editing by Stephen Coates and Sherry Jacob-Phillips)

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