Manufacturing News

Light-vehicle sales drop 3.7% on weak April demand for small cars

China's light-vehicle sales slid 3.7 percent year on year to 1.72 million units in April, as Beijing's higher purchase tax dampened demand for small cars.

On Jan. 1, the central government raised the purchase tax on vehicles with engine displacements of 1.6 liters or smaller to 7.5 percent from 5 percent last year.

In April, sales of vehicles in this category fell 10 percent to 1.14 million, according to the China Association of Automobile Manufacturers. Cars and trucks affected by the higher tax accounted for 66 percent of China's light-vehicle sales last month.

Thanks to stronger demand in the first quarter, China's light-vehicle sales through April rose 2.5 percent to 7.67 million.

Partly because of the tax increase, the manufacturers' association has modest expectations for industry sales. In January, the association predicted that light-vehicle deliveries would increase 5 percent this year.

That growth rate is relatively flat compared with 2016, when industry sales increased 14 percent. Last year, demand picked up after the central government temporarily halved its 10 percent purchase tax on small cars.

The tax cut -- which was enacted in October 2015 -- was intended to rejuvenate stagnant car sales.

In 2018, Beijing will restore that tax to 10 percent.

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