Mainland car sales up for third month
The mainland's car industry may have turned the corner with an increase in sales for the third straight month in May that could offset the slowdown in January and February.
Analysts, however, said a new round of tax cuts on Tuesday for energy-saving vehicles was unlikely to boost growth any further.
Preliminary sales figures for the three best-selling car types - sedans, sports utility vehicles and multi-purpose vehicles - jumped 13 per cent year on year to 970,000 units last month, after seeing growth in March and April, the China Passenger Car Association said.
The official China Association of Automobile Manufacturers, which will release overall car sales figures for May in the next couple of days, had earlier forecast sales growth of 5 to 8 per cent this year.
Retail car sales dropped 1.33 per cent year on year in the first four months, but May's performance could well reverse the trend.
The government on Tuesday halved vehicle taxes on 65 energy-saving models from 24 brands and announced a tax waiver for those buying seven electric models from three carmakers. This followed a similar announcement in April that covered 49 models. Most of these were vehicles with engines under 1.6 litres made by domestic firms.
The tax cut would be effective from January 1, meaning those who have bought these vehicles would get a refund, according to a document jointly released by the Ministry of Finance, the Ministry of Industry and Information Technology and the State Administration of Taxation.
But John Lu, a transport analyst at Guosen Securities, said this would do little to boost sales.
'Vehicle taxes for small-engine cars between 1 and 1.6 litres amount to between a meagre 300 yuan [HK$365] and 500 yuan a year. I don't think any car buyer would take that into account in making purchase decisions.'
The market is looking to the government to renew a policy under which rural car owners would be subsidised to replace old vehicles with more energy-efficient models. It is widely expected to be announced this month.