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China to slash Car import taxes by 50%


According to sources that have spoken to Bloomberg China is considering a move to reduce car purchase tax form 10 per cent to as little as 5 per cent, a 50 per cent drop.

The move is in response to China's ailing automotive market which is heading for its first decline in car sales in almost two decades, which some are saying is a direct result of the US trade war.

China has seen outstanding growth in the automotive market thanks to the increasing income of the Chinese middle classes.


The proposal has been good news for carmakers across the globe with Volkswagen AG seeing their share price increase by a staggering 6.9 per cent, the biggest intraday move since July 2016. Ford Motor Co. and General Motors Co. rallied in U.S. trading, while BMW AG and Daimler AG gained in Germany.

This is helping to steady the world’s largest automotive market, which is facing its first decline in more than two decades as a trade war with the U.S. hits at consumer spending power.

The trade war between the US and China has seen the Chinese economy and its stock market take the biggest hit.

The tax cut will only apply to cars with engines of 1.6 litres or smaller, said the people, declining to be named because the information isn’t public. China’s National Development and Reform Commission, also the top regulator, has submitted a plan but no decision has been, they said.

“This is definitely good news and a message the market has been waiting for,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler.
Ford rose as much as 6.3 per cent on Monday, GM rallied as much 5.1 per cent.

Cars of that engine size accounted for some 70 per cent of the total number of passenger vehicles sold last year, according to the China Association of Automobile Manufacturers.

China increased the levy on vehicles imported from America to 40 per cent. 
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