Auto sales drop due to decreased demand, tax hike

Auto production and sales declined in April in the world’s largest auto market due to a decrease in demand and higher sales tax, data from the China Association of Automobile Manufacturers (CAAM) showed.

A total of 2.08 million vehicles were sold in April, down 2.2 percent year-on-year, CAAM said, while total output dropped 1.9 percent year-on-year to 2.14 million.

“Although currently stable, China’s auto industry is approaching the critical turning point for a cooling market,” said Ye Shengji, deputy secretary-general of CAAM.

In October 2015, China slashed the sales tax on cars with engines of 1.6 liters or below from 10 percent to 5 percent, helping increase total auto sales to a record high of 28.03 million last year. The tax was raised to 7.5 percent in 2017 and will return to 10 percent again in 2018.