Global automakers blame tax policy, Lunar New Year for China sales drop
BEIJING: China vehicle sales in January fell by the largest margin since 2015 for several global automakers, with General Motors Co and Ford Motor Co blaming the roll back of a tax cut on smallengined vehicles and the Lunar New Year holiday.
Ford Motor said that its sales fell 32 per cent year-on-year, while GM said sales dropped 24 per cent, making the biggest drop since the two automakers first began reporting data for retail sales of their vehicles in China in the second quarter of 2015.
China’s central government raised the purchase tax on cars with engines of 1.6 liters or less to 7.5 per cent this year from a special rate of five per cent last year, a policy originally instituted to shore up sales in a weakening economy. It plans to return the rate to 10 per cent in 2018.
“January was an unusual month with the earlier timing of the Chinese New Year holiday and the impact of the reduced tax incentive,” Ford said in a statement citing Peter Fleet, head of sales for Asia Pacific. “Sales of vehicles not affected by the tax incentive were strong.”
China annually takes a oneweek holiday for the Lunar New Year, which typically distorts sales in January and February as the dates vary each year.
On Wednesday, Toyota recorded a 18.7 per cent drop in January sales, its largest decline since March 2015.
Nissan reported a 6.2 per cent sales decline for the month, also citing seasonality and “the rush for car purchase in December 2016” before the tax policy changed.
Honda, which has outstripped its US and Japanese competitors for the last two years, thanks in part to hot-selling sport-utility vehicles, said on Wednesday that sales grew 5.3 per cent in January.
The country’s automakers association predicts sales in China, the world’s largest auto market, will grow five per cent this year, slowing from a 13.7 per cent rise in 2016 that was achieved on the back of the tax cut. — Reuters