China Halves Sales Tax on Small Cars

China Halves Sales Tax on Small Cars.

Will Stimulate Auto Sector, But Won’t Help Foreigners Much.

While the auto world focussed on Volkswagen and the diesel scam fallout, China cut the 10 per cent purchase tax in half on cars of 1.6 litres or under.

The Financial Times’ Lex column talked about China’s contradictory policy making – clamping down on loans for share buying while propping up stocks with government buying. Lex said this is another contradiction after it recently announced plans for emission cuts, then stimulated the auto sector.

Either way, it won’t help Europeans of Americans much.

“It should particularly help domestic manufacturers. Unlike foreign marques, which dominate the high end of the market, domestic brands such as Geely and Great Wall generate around four-fifths of revenues from smaller engines,” Lex said.

The Chinese government announcement also reiterated state support for electric and hybrid power. That might find its way to helping Western brands.