Auto sales subsidies for China's rural residents to end
The Chinese government will end subsidies for vehicle sales in rural areas, three days after announcing a halt in incentives for buyers of small vehicles.
In a statement on its Web site, the Ministry of Finance said it would no longer offer incentives to rural purchasers of small cars and trucks. That will end a policy started in 2009 to spur auto sales at the height of the global recession.
On December 28, the government announced plans to raise the sales tax on vehicles with engines of 1.6 liters or smaller to 10 percent from its current 7.5 percent. The tax was 5 percent in 2009.
Incentives such as a consumption-tax rebate, subsidies for rural car buyers and a scrappage incentive ranging up to 18,000 yuan helped boost vehicle sales last year.
China's vehicle sales may reach 20 million units in 2011, according to Bill Russo, a Beijing-based senior adviser at Booz & Co.
