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July 12, 2016

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Home » Business » Auto

More cars sold in June to drive H1 to close high

MORE cars were surprisingly sold in China in June to drive the first half of 2016 to end on a bullish note as buyers rushed to benefit from tax cuts for small displacement engine vehicles before they expire at the end of the year.

Sales of passenger cars and commercial vehicles rose 14.58 percent last month from a year earlier to 2.07 million units, bringing the combined sales in the first half to 12.83 million units, up 8.14 percent year on year, the China Association of Automobile Manufacturers said yesterday.

Sales of passenger cars, which make the bulk of China’s vehicle sales, rose 9.23 percent in the first half of this year, overtaking the 8 percent growth target.

The market rebounded in October after the central government cut vehicle purchase taxes for energy-saving vehicles with an engine smaller than 1.6 liters. The cut equals to 5 percent off the retail price of over 70 percent of China’s passenger cars sold.

This incentive, which has been working its magic so far, may drive people to buy before next year when the policy may not be renewed.

“The policy will unleash the demand faster as the year end approaches,” said Zou Tianlong, auto analyst of UBS Securities. However, the pending expiration of the policy “will leave a negative impact on the passenger car sales in 2017,” he added.

The policy-driven growth model also applies to the new-energy segment where 170,000 new-energy vehicles were sold so far this year, up 127 percent year on year.

But consumer research firm Nielsen’s latest report predicted that growth in new-energy car sales might slow in the latter half of this year as the government has cut subsidies and reduced car-purchasing quotas in big cities.

Although up to 50 percent of potential green car buyers prefer gasoline-electric-hybrid vehicles to plug-in hybrid cars and purely electric ones, the former vehicles do not get any official favorable policies and are not even classed as new-energy cars by sales because of its middle-way solution.

But Yan Xuan, president of Nielsen China, predicted: “Hybrid cars will be the force to drive sales.”




 

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