Manufacturing News

JAC expects slower China auto sales growth in 2017

Anhui Jianghuai Automobile Group expects slower growth in China's vehicle sales this year as the market nears saturation in demand.

Industry sales of light vehicles in China grew an unexpectedly strong 15 percent last year following a tax cut for vehicles with small engines. But sales growth was expected to level off this year after Beijing raised the sales tax on those vehicles to 7.5 percent, up from 5 percent.

"Because China already has 28 million vehicles (in annual sales) and is extremely large, another big increase is not very likely," JAC Chairman An Jin told Reuters on Monday on the sidelines of China's parliamentary session, to which he is a delegate.

In September, JAC signed a preliminary deal with Volkswagen AG to consider forming a new joint venture to produce electric vehicles.

According to An, talks between the two companies are continuing but are "not yet at a completely successful stage," adding that the tie-up has not received final approval.

"We are continuing to make great efforts," he said of the talks, declining to say when a final agreement might be made.

The joint venture would be VW's third in China. Foreign automakers are required to form joint ventures to manufacture vehicles in China and are generally limited to two passenger car ventures.

But the government is open to a possible alliance between JAC and Volkswagen because it would produce EVs and plug-in hybrids, An said.

Volkswagen has said it hopes to conclude talks in the first half of this year and deliver its first car with JAC by 2018.

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