BEIJING (Bloomberg) — Light-vehicle sales in China expanded at the slowest pace since 2012 so far this year, underlining the slump in demand that prompted the government to cut a tax on car purchases to revive demand in the world’s biggest auto market.
Retail deliveries of cars, SUVs and multipurpose vehicles increased 5.8 percent to 14.4 million units in the January-September period, according to the China Passenger Car Association, the slowest pace in three years. Sales in September rose 2.5 percent, the second consecutive month of gains after declining in June and July.
China announced stimulus measures at the end of September by halving the purchase tax on an estimated 64 percent of passenger cars, after lobbying by the state-backed auto association amid weak economic growth. The Shanghai Composite Index has rebounded 11 percent from an August low as speculation policy makers will introduce more measures to spur growth and stabilize mainland markets gained ground.
“We will see major sales growth in the October numbers as the impact of tax cut kicks in,” said Yale Zhang, a managing director at Autoforesight Shanghai Co. “Car buyers are recovering from a stock rout psychologically and starting to buy if they do need a car.”
China cut the purchase tax on vehicles with engines 1.6 liters or smaller by half to 5 percent effective Oct. 1 through the end of next year. The directive also forbade local governments from restricting the purchase and operation of electric vehicles and reiterated support for promoting new- energy vehicles and battery development.
For the month of September, SUVs were the only category that saw sales increase, surging 60 percent to 548,508 units. Deliveries of sedans, multipurpose vehicles and light-commercial vehicles all declined.
Sales of Mercedes-Benz in China soared 31 percent in the nine-month period, helping it become the world’s top luxury-car brand for the third consecutive month in September, surpassing BMW and Audi. Deliveries at BMW rose 2 percent, while Audi posted almost level sales.
General Motors’ China sales in September fell for the fifth time in six months, deepening a slump in one of its key markets. The automaker’s deliveries in the nine-month period rose 1.6 percent, it said Monday.
Toyota Motor Corp.’s sales in the country climbed 12 percent in the nine months through September, while Nissan Motor Co.’s sales gained 1.8 percent. Geely Automobile Holdings Ltd.’s deliveries surged 30 percent.
The auto market in the world’s second-biggest economy will continue to grow, though not at the “double digit” pace seen in the past three to four years, Ford Motor Co. CEO Mark Fields said in Shanghai on Monday. The carmaker said it will invest 11.4 billion yuan ($1.8 billion) in China research and development.