Demand growth to outweigh end of tax breaks: Carmakers

Updated: 2010-12-30 14:13
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General Motors Co (GM), Geely Automobile Holdings Ltd and BYD Co said growing demand for cars in China will outweigh the impact from the end of tax incentives that boosted sales, Bloomberg News reported Thursday. 

According to the report, Geely and BYD said that new models and other government measures supporting car sales will offset a higher sales tax announced by the government on Dec 28. Kevin Wale, GM's China president, said last week the nation's economic growth and an increasing pool of new car buyers will help deliveries increase in 2011.

"Some of the government incentives will be taken off, but there is tremendous underlying demand," Wale said on Dec 20.

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Measures including consumption-tax cuts, subsidies for rural car-buyers and incentives to trade in older models helped China's industry-wide vehicle sales jump 46 percent last year to 13.6 million and 34 percent during the first 11 months of 2010, the report said.

China, the world's largest auto market, said Tuesday it will raise the tax on vehicles with engines of 1.6 liters or smaller to 10 percent from 7.5 percent next month, said the report, adding that the tax was five percent in 2009.

China's auto sales may rise to 18 million units this year, making the nation the world's largest auto market for a second year, the report said.