China car sales mark first rise in 6 months in Sept

A man takes a look at second-hand BMW cars at a dealer shop in Beijing. Vehicle sales in China rose 2.5% in September from a year earlier, the China Passenger Car Association said yesterday.ReutersBeijingChina vehicle sales climbed for the first time in six months in September, bolstering hopes that a tax cut for small cars which started this month will help breathe fresh life into the world’s largest auto market. The sales rise encouraged China’s main auto association to reiterate an earlier forecast of 3% growth for 2015, a marked change in tone from last month when it warned that slowing economic growth meant there was a chance of an annual sales decline. September sales gained 2.1% from a year earlier to 2mn vehicles, contributing to a 0.3% increase for the first nine months of 2015, the China Association of Automobile Manufacturers said. Association chief Dong Yang said that while the reason for the September climb was not immediately apparent, he believed that government policies including a halving of the sales tax on cars with 1.6-litre engines or smaller to 5% would have a positive impact on the market. But a wave of discounting by General Motors, Volkswagen and others earlier this year failed to produce robust sales. Industry experts say the tax cut, a repeat of a similar policy move after the global economic crisis in 2008, is not likely to trigger a turnaround in the overall market. Auto dealers said showroom traffic for October so far showed the tax cut was having some impact but cautioned this could just be smaller cars accounting for greater proportion of sales rather than overall sales volume increasing. “Almost all cars selling in my store are below 1.6 litre,” said Lan Zhijun, a sales manager at a Geely dealership in Shanxi province. Foot traffic is up 10% year-on-year, while sales are up 4%, Lan said. “Almost all customers coming in our store will ask about the policy.” Automobiles in the 1.6 litre and under category account for nearly 70% of total sales in China, and Volkswagen makes five of the 10 best-selling models in the segment. Shanghai Volkswagen, a joint venture between VW and SAIC Motor, said buyers would save 3,200 yuan to 9,100 yuan ($500-$1,440) on its various models eligible for the tax cut. A senior executive at Zhongsheng Group Holdings, one of China’s biggest dealer chains with nearly 200 outlets, said the tax cut has so far not affected overall sales at many of Zhongsheng’s retail outlets for Toyota, Mercedes-Benz and other brands. “At our Toyota outlets, we don’t really see much significant change or impact on overall volume,” the dealer executive said, declining to be identified as he was not authorised to speak to the media. “People who planned to buy cars with 1.8-litre or 2-litre engines are now taking smaller engine models to take advantage of the new policy. That’s about the extent of impact we have seen so far.”  The tax cut, which came into effect on October 1, is set to run through to the end of 2016.