Boom before purchase tax concessions ends

During the recent press conference held by the Ministry of Industry and Information Technology, Zhang Xiangmu, the Secretary of Department of Equipment Industry of MII, said it is not determined yet whether to continue the half purchase tax concessions for vehicles till December 31st. It is for the first time that officials made any response to the wide concern that ‘whether the purchase tax concessions for vehicles with a displacement of 1.6 ltr will be extended or adjusted next year’, A Chinese newspaper Strait News reported.

　　The news touched consumer’s nerves.

After visiting several local vehicle showrooms, the reporter learned that as the countdown to the purchase tax concessions there is an upsurge in consumers. According to some dealers, such as BYD, Dongfeng Nissan, FAW Toyota, Guangzhou Honda, Beijing Hyundai, there is a great increase in the visitors and orders in the showrooms these days.

　　Policy factors

　　Almost 40% of consumers would buy cars in advance.

As the recent vehicle market is heating up, insiders analyze that the preferential policy has remarkable impact on those consumers who already had planned to buy vehicles with engine displacement of 1.6 ltr and below. However, once the preferential policy expires, consumers have to pay extra 5% of purchase tax. Therefore it is a wise option for consumers to get on “the last train” and buy cars before the end of the year.

Recently, a well-known domestic research company has carried out an online survey of potential consumers (who will plan to purchase cars in 2 years) above 18 in Beijing, Shanghai and Guangzhou. The result shows that almost 36.3% of potential consumers will buy cars ahead, apparently affected by the expiry of the preferential policy.

The sales volumes of vehicles with 1.6 ltr and below have hit a small climax since October. According to the reporter, there is an apparent surge in sales of vehicles with a displacement of 1.6 ltr and below, such as Beijing Hyundai Elantra, Dongfeng Nissa Tiida, and FAW Toyota Corolla.

　　The sales of economy cars surge.

According to Miss He, a consumer who was placing an order in an outlet of Dongfeng Nissan, it's a rare opportunity for consumers to buy cars, since the half purchase tax concessions may help them save 4000 or 5000 Yuan. Many consumers hold the same thoughts.

As experts said, the hit of economy cars, such as BYD F3 Beijing Hyundai Elantra, lies in the fact that consumers are seeking for benefits as well as the cost-effectiveness of economy cars is getting more prominent. At the same time quality improvement and service upgrades have further enhanced economy cars competitiveness in the market. Moreover, consumers who planned to buy cars in the first half of next year are likely to conduct their purchase in advance to the fourth quarter of this year. The situation has also boosted the boom of vehicle purchase in the domestic market, according to analysts.

Looking at auto market this year, the purchase tax concessions are the dominant impetus to the domestic vehicle market in 2009. According to someone from BYD motors, as a great opportunity for vehicle products with 1.6 ltr and below, the preferential policy has directly brought along the market growth in this area.

　　The advice from experts

　　The preferential policy continues.

Half purchase tax concessions and fuel tax have totally contributed to the vehicle growth in the domestic market, as well as promoted the output and sales volume to hit 10 million units in China Automobile Year.

According to the data released by China Association of Automobile Manufacturers, state stimulus policies have encouraged the small-displacement vehicles with 1.6lit and below to make outstanding performances this year. The accumulated sales volumes achieved 5.0608 million units with the annual growth of 60.43%, accounting for 69.89% of the total volumes of passenger cars, which made the highest record in market share for several years.

Following are some top auto brands with their sales volumes from January to September this year: BYD with 193100 units, Hyundai Elantra with 180400 units, Buick Excel with 171700 units, Jetta with 168000 units, Santana with 146000 units and Elantra with 129800 units. We may see economy cars with the displacement of 1.6lit play dominant roles in the ranking list. Especially the growth of F3 and Hyundai Elantra is much more enormous, compared with the same period last year.

The preferential policy not only benefits the consumers, but also gives automakers a leapfrog development in a situation with many advantages. Data in September shows that BYD, the new prominent automaker, has set up a new record of monthly sales with 44070 units once again. With a displacement of 1.8lit originally, two types of special Corolla with engine displacement of 1.6lit have been timely introduced to the market during the golden season in sales. More than one month after the introduction, Corolla with 1.6lit has made an excellent performance. In addition the mainstream automakers prioritizing vehicle models with1.6 lit, such as, shanghai GM, Dongfeng Nissan and Beijing Hyundai, have frequently made new sales record this year.

According to Dong Yang, the Vice President of China Association of Automobile Manufacturers, purchase tax concessions have not reduced the state tax revenue, but increased it by 4% between January and September. Moreover, the preferential policy does not only benefit small-displacement vehicles, but also stimulates the domestic demand and optimizes the economic structure. Therefore it is reasonable to continue the preferential policy which could kill 3 birds with just one stone. ( Translator：Qinghua /SERENA)

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