The world’s largest auto market could receive a windfall from Beijing as policymakers weigh up slashing car purchase taxes in a bid to boost falling sales, Bloomberg reports.
Taxes on buying new cars would fall to just 5% if proposals by China’s National Development and Reform Commission are approved. The cut would affect primarily smaller passenger cars, sources said, with engines no larger that 1.6 litres.
Shares in auto companies surged on the news, just one week after many of the industry’s big players announced disappointing sales for the third quarter. VW climbed 6.9%, while poor performers Ford and GM both rallied on US markets.
China’s auto market is forecast to experience its first annual sales decline in two decades, a symptom of a wider loss of consumer sentiment, tighter consumer financing channels and fears surrounding a trade war.