Posted by WARREN MOSLER on January 29th, 2009
Jan 28 (Xinhua) — Due to bigger-than expected cut in fuel prices at the end of 2008 and halved car purchase taxes in effect just before the Lunar New Year, China’s auto industry can expect the year of the ox to be a bullish one for sales growth, which was in a ten-year low in 2008.
“With the recent policy changes on fuel price, car purchase tax and fees, I can save more than 8,000 yuan ($1,170) to have a car,” said Wang Yong, who just bought a new POLO sedan produced by Shanghai Volkswagen Co Ltd.
Like many other auto makers, the company offered discounts of 5,000 yuan for POLO and LAVIDA models during China’s Lunar New Year to woo the young working class. The prices for the cars are a little higher than 100,000 yuan, which is generally considered affordable for wage earners in China.
More than 3.1 million small-sized cars were sold in China last year, accounting for 61.54 percent of the total 9.35 million units of vehicles sold in the period, when the year-on-year growth slowed to 6.7 percent, the lowest in ten years, according to statistics from the China Auto Industry Association.
Ye Sheng, an auto industry analyst said that China’s auto market is far from saturated — especially for private vehicles.
He expected the government’s stimulus to boost the market sentiment this year.
Ye said despite that the global financial pinch eroded the demand for business cars and drove up the cost for auto production, China’s auto demand would continue to grow with the increase of personal wealth.