China Outlook. Tax cut on small engines pulling 2017 sales over 30 million

China Automotive Mercedes-Benz-Vision_Maybach_6_Concept-2016

China Automotive industry outlook for 2017 is positive again due to the tax cut on low displacement engines extended while with a reduced benefit. CAAM project sales up 5% while we are a bit more optimistic.

China Automotive industry in the 2016 represented for the first time over 30 percent of the global vehicles sales acquiring an absolute huge (too huge…) relevance over the global automotive trend.In the last decade, this market has been “The driver” for global sales, considering that between 2010 and 2016, China has covered the 50% of global light vehicles raise from 73 to the 93 million.

In the early 2015 the Chinese government has announced to aim at a stable industry growth fearing from collateral effects of a too fast growth; 30 million sales in the 2020 were considered the acceptable target, while the industry was focused to change engine mix and fast develop a local electric vehicles sub-sector.

However, the introduction of 50.0% cut in its sales tax on autos with engines smaller than 1.6 liters introduced on September 30th, 2015 and lasted in December 2016 created a strong and progressive demand pulling the total 2016 volume up to 28 million.

The sales tax on cars with engines of 1.6 liters or below was cut to 5 percent from 10 percent in late 2015, giving the auto industry a much-needed shot in the arm as the economy slowed.

Now it was announced that the tax will rise to 7.5% for 2017, before returning to 10% next year and will likely push up sales by 5% in 2017 to 29.4 million vehicles according to the China Association of Automobile Manufacturers announcement. Our experts are a bit more optimistic expecting sales over the 30 millions for this year, while the 2018 outlook is less positive and sales could stop growing.

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