China sales forecast and automaker's plans: Tax reduction to continue until end of 2017

Non-state owned makers develop aggressive plans, foreign joint ventures remain cautious



China sales forecast 2017
(Source: Created by MarkLines based on the press release of China Association of Automobile Manufacturers)

  According to the China Association of Automobile Manufacturers (referred to as CAAM below), China's sales of new cars in 2017 (based on numbers of factory shipment, includes exports, but not imports) are expected to be 29.4 million units, a 4.9% increase year-over-year (y/y). Passenger vehicle sales are projected to rise 5.4% to 25.7 million units due to the continued popularity of SUVs and MPVs. For commercial vehicles, although sales of buses are on a downward trend, those for commercial vehicles as a whole are expected to increase slightly to 3.7 million due to an increase in truck sales volume.

  A tax break for small passenger vehicles with an engine displacement of 1.6L (the vehicle purchase tax was lowered from 10% to 5%) was originally scheduled to be in effect until the end of 2016. However, in mid-December 2016 the government decided to maintain the tax break from January 1 to the end of 2017, while at the same time raising the tax rate to 7.5%.

  The U.K.-based research firm LMC Automotive reported that China's light vehicle production volume in 2017 (Passenger vehicles and small commercial vehicles with GVW 6 t or less including imports) increased by 2.1% y/y to 27.6 million units. It predicts moderate growth for 2018.

  Each automaker is projecting different number for their vehicle sales in 2017. Although the tax cuts will continue, joint venture companies remains cautious, which may be a result of the increase in the tax rate. In contrast, Chinese non-state owned manufacturers have proposed aggressive plans and goals.

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The Chinese market in 2016: Passenger vehicle tax break contributes to record high sales (Jan. 2017)