Carmakers advance on hopes for rescue deal
Shares of Hong Kong-listed carmakers rallied yesterday on expectations of an undefined rescue package in addition to a possible increase in tax rebates to help an industry whose export growth has stalled.
Industry players said one part of the stimulus measures could be increasing the export value-added tax rebate to cover the full 17 per cent tax, up from the 7 per cent that is rebated. There is also talk of increasing financial support to carmakers for their export operations.
Both should be implemented soon to maintain growth, industry executives argue.
In response to the anticipated benefits, domestic-market-focused carmaker Denway Motors surged 19.12 per cent to HK$2.99, while Dongfeng Motor Group closed up 14.79 per cent at HK$2.95.
Export-oriented Brilliance China Automotive Holdings jumped 14.12 per cent to 48.5 HK cents, while Geely Automobile Holdings climbed 9.68 per cent to 68 HK cents and Great Wall Motor rose 9.26 per cent to close at HK$2.95.
Figures released by the China Association of Automobile Manufacturers indicated that while vehicle export growth dropped 51.62 percentage points, export sales managed to record a 20.31 per cent increase for the first 11 months of last year to 644,600 units.
In November, vehicle exports fell 46.5 per cent from a year earlier to 35,800 units.
Total vehicle sales on the mainland, including exports, are expected to have reached 9.3 million units last year. The association originally projected sales of 10 million vehicles. It earlier estimated mainland carmakers would not meet the 1 million vehicle export target because the global economic crisis had severely affected overseas markets.
An industry report by China International Capital Corp said vehicle exports might continue to be dampened by the recession spreading from developed economies to emerging markets.
Analyst Zhang Xin at Guotai Junan said tax incentives would not solve the problem of higher export growth because 'slowing demand in overseas markets has directly led to fewer orders.'
He added: 'Russia, especially, has tightened up the entry of Chinese carmakers.'
Mr Zhang said industry players had suggested many ideas to Beijing, but the central government might be listening to other views about reviving the industry.
In addition to sustaining vehicle export growth, the Shanghai Securities News said yesterday that Beijing would issue supportive policies for carmakers in the coming months to maintain about 10 per cent growth in the industry this year.
The policies, worked out by the National Development and Reform Commission, include reducing the vehicle consumption tax and implementing incentives for the development of clean energy cars.
Other measures, expected to be unveiled by the State Council in the first quarter, include encouraging further industry consolidation.