Consumers rush to buy cars as ...

    Policy has led a prosperous domestic automobile market this year

Reported by Beijing Youth Daily it is estimated that vehicle purchase tax preferential policy has driven at least a growth of 10% within the automobile market. November 31st will be the expiration of this widely concerned policy which has led to rapid development of Chinese automobile market.

While this policy will be continued or not is not known, although merchants and buyers have shown great enthusiasm to rush to get on this “last train”, message from all sides is clear indicated that the continuity of this policy has become the common hope of the industry.

　　A nationwide reduction of vehicle purchase tax reached 11.4 billion

If purchase tax preferential policy of passenger car with a displacement of the 1.6-liter or less is abolished by the end of this year, will you buy cars ahead? Confronted with this question, A Miss Liu, one staff of a security company responded to a reporter surely: “Of course! I have already purchased a small-displacement car this year. My husband is also prepared to buy one before the expiration of the preferential policy. Now is cost-effective to buy one since we need one more sooner or later.”

In order to cope with the impact the international financial crisis imposed on the automobile industry, as well as revitalize the automobile industry, the State Council decided to reduce the vehicle purchase tax to 5% to cars with a displacement of 1.6-liter or less from January 20th to November 31st.

It can be said that the implementation of vehicle purchase tax preferential policy truly reduce sthe costs of consumers and benefits them. According to information released by State Administration ofTaxation, in line of the preliminary statistics, a nationwide reduction of vehicle purchase tax have reached 11.4 billion by the end of August this year.

　　Consumers wish the 2.0-liter models be covered

“This year, almost every customer comes here to buy a car will ask questions about the issue of preferential policy. Some customers want to know whether the 2.0-liter models also be suitable to the preferential policy. Some customers soon decide to purchase one the minute they learn that the policy is to expire immediately. One sale staff of FAW-Volkswagen told the reporter in one of their shop in Beijing Lize Bridge.

The reporter found during the interview that as countdown of the preferential policy, many consumers worried about implementation of this policy would be abolished or the scope would be narrowed next year. “We hope this policy can be extended next year. If the 2.0-liter models be covered, it is better.” Ms. Liu told reporters.

It is also worth mentioning that the implementation of preferential policy has not brought about a declination of tax revenues. According to a national financial data recently released by the Ministry of Finance, from January to October this year, the vehicle purchase tax got a growth of 6.3% nationally. It is fully reflected the prosperity of China’s auto market this year.

Within the first three quarters of this year, China’s domestic auto sales have been close to more than 10 million units, which is larger that the whole last year. Particularly, cars with a displacement of 1.6 -liter the got a rapid growth in sales, companied by a continued enhancement of its market share.

　　Policy to stimulate is just a stopgap measure?

The sound development of automobile market this year and the related policies promulgated by the state are inseparable. Just because of the promotion of a series of auto consumption policies such as the fuel tax reform, restructuring and revitalization planning of the automobile industry, vehicle purchase tax preferential policy, bringing cars to the countryside and car scrapping subsidies that our domestic auto market can maintain a growth trend during the downturn of the global auto market. Relevant officials of China Association of Automobile Manufacturers pointed out that the effect of vehicle purchase tax preferential policy was prominent. It was estimated that it at least gave impetus to a growth of 10% to auto market.

One stakeholder of Beijing North Star Asian Games Village Automobile Exchange Market introduced to the reporter that in the past, the sales of passenger cars with a displacement of 1.6-liters and less accounted for 40% of the whole market. After the implementation of the policy, the sales volume rapidly increased to more than 60%. The reduction of vehicle purchase tax had an obvious effect in adjusting the consumption structure.

The report jointly issued by Ministry of Industry and Information Technology and Chinese Academy of Social Sciences declares that as the policies such as car purchase tax cut down by one half, automobile and home appliances to the countryside have played a prominent role to boost demand and promote the adjustment of economic structural, it is worth considering to prolong the period and expand the scope of this policy. As can be seen, although it is not certain whether current policy will be continued, the people within the industry are very optimistic about its prospects.

However, any simulative policy is just an expedient measure. “Though the automotive market can be influenced by macroeconomic policies, after all, it has its own laws which can not be blindly relied on simulative policies. Basically, the real bar should be in the hands of the market regulation.” Relevant experts also pointed out.（translator：Yalong/ Jessie）

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