China Drivers Rush to Buy Large Cars Ahead of Tax Increase
2008-08-22 Source：english.chinabuses.com
China's plan to raise taxes on large cars has spurred sales of BMW AG's X5 sport-utility vehicles, Audi AG's A8 sedans and other models as drivers try to beat price increases, according to the head of the country's largest auto market.
Consumers are rushing to buy big cars,'' Su Hui, general manager of Beijing Asia Games Village Automobile Exchange, said in an interview in the city yesterday. ``Seven or eight models are now out of stock in our market.''
Consumption taxes on cars with engines of between 3 liters and 4 liters of capacity will jump to 25 percent from 15 percent starting next month. A tax cut for smaller cars, designed to spark demand for the less-polluting and more efficient vehicles hasn't excited customers, according to Su.
There have barely been any phone calls or consumers in shops asking about small cars since the tax-cut announcement,'' Su Hui, general manager of Beijing Asia Games Village Automobile Exchange, said in an interview in the city yesterday. ``More incentives are needed.''
China, the world's largest oil consumer, said last week that it will cut the tax on cars with engines of less then 1 liter to 1 percent from 3 percent next month as part of a wider push to cut energy use and pollution. The tax cut won't be enough to lure consumers away from larger vehicles as it will only be worth a few hundred yuan, Su said.
Beating Deadline
The rush to buy large vehicles will slow down after the higher taxes come into effect starting September 1, according to Su.
Consumers will need a couple of months to get used to the higher prices before they come back to showrooms,'' said Su.
The auto market, in the Beijing suburbs, sells vehicles from automakers including Bayerische Motoren Werke AG, Daimler AG's Mercedes-Benz brand, Volkswagen AG and Chery Automobile Co. About 80,000 new vehicles were sold there last year.
Sales of cars with engines of less than 1 liter fell 31 percent in China last year to 251,700, as drivers used higher wages to buy larger models. Overall passenger-car sales jumped 22 percent.
Automobiles account for about half of the total oil consumption in China, the world's second-largest vehicle market. This may rise to 60 percent by 2020, according to the Development Research Center of the State Council. China also raised the price of gasoline, diesel and other fuels in June in a bid to curb usage.
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