Ve­hi­cle sales surge 13.3% in Oct af­ter tax cut

China Daily (Canada) - - LIFE - By BLOOMBERG

Pas­sen­ger ve­hi­cle sales rose at the fastest pace in 10 months af­ter the gov­ern­ment cut a tax on pur­chases in Oc­to­ber, ben­e­fit­ing car­mak­ers like Great Wall Mo­tor Co and adding to ev­i­dence that de­mand is re­bound­ing in the world’s largest auto mar­ket af­ter a sum­mer slow­down.

Whole­sale de­liv­er­ies of sedans, SUVs and mul­ti­pur­pose ve­hi­cles climbed 13.3 per­cent to 1.94 mil­lion ve­hi­cles in Oct, ac­cord­ing to the Chi­naAs­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers. Chi­nese car­mak­ers out­per­formed the mar­ket, and boosted their share of sales by 2.1 per­cent­age points from a year ear­lier.

The pickup in car de­mand re­in­forced of­fi­cial data re­leased onWed­nes­day show­ing re­tail sales in­creased faster than es­ti­mated in Oc­to­ber, and comes as JackMa’s Alibaba Group Hold­ing Ltd set a new record for its an­nual Sin­gles’ Day shopathon. The role of con­sumer spend­ing is in­creas­ing in China, as wage gains cre­ate a bur­geon­ing mid­dle class that fu­els sales of ev­ery­thing from movie-theater tick­ets to smart­phones and In­ter­net ser­vices.

“The ef­fect from the pur­chase sales tax cut has been pos­i­tive and should last for a few months,” said Yang Jing, a Shang­hai-based as­so­ciate di­rec­tor at Fitch Rat­ings. “China’s econ­omy is in tran­si­tion and consumption will be­come a big­ger part of its eco­nomic growth. Help­ing to boost auto sales is part of the gov­ern­ment’s plan.”

The ef­fect of the stock mar­ket de­cline that soured con­sumer sen­ti­ment ear­lier this year should fade as the mar­ket re­cov­ers, Yang said. China’s bench­mark Shang­hai Com­pos­ite In­dex en­tered a bull mar­ket on Nov 5, af­ter an un­prece­dented State res­cue ef­fort halted a $5 tril­lion crash and or­di­nary in­vestors re­turned to the mar­ket.

Chi­nese au­tomak­ers have gained this year af­ter in­tro­duc­ing cheaper sport util­ity ve­hi­cles that com­pete with sim­i­larly priced sedans from for­eign brands. With buy­ers fa­vor­ing the higher-rid­ing and more spa­cious SUVs, global car­mak­ers in­clud­ing Volk­swa­gen AG are work­ing on en­try-level of­fer­ings to tap the ex­pand­ing de­mand. SUV sales surged 61 per­cent in Oc­to­ber to 622,000 units, while sedan de­liv­er­ies were al­most un­changed at 1.05 mil­lion.

Great Wall, the big­gest seller of SUVs in China, boosted Oc­to­ber sales by 14 per­cent. Gen­eral Mo­tors Co, Ford Mo­tor Co and HyundaiMo­tor Co also re­ported gains in their Oc­to­ber de­liv­er­ies, re­vers­ing re­cent de­clines. The tax cut, which cov­ers about 70 per­cent of au­tos sold in China, is ef­fec­tive through the end of next year.

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