Beijing halves sales tax on cars with engine sizes up to 2.0 liters

Beijing, seeking to revive vehicle sales undermined by government anti-pandemic measures, will halve the sales tax to 5 percent on new light vehicles with engine sizes up to 2.0 liters and priced at 300,000 yuan ($45,045) or below. 

The tax cut will be applied to domestically built vehicles as well as imports starting June 1 through December 31, according to a statement released by China’s finance ministry on Tuesday.

In China, light vehicles are comprised of sedans, crossovers, SUVs, multi-purpose vehicles and minibuses. 

The China Passenger Car Association, a Shanghai-based consultancy, predicts that the tax incentive will boost China’s new light-vehicle sales by 2 million this year.

With lockdowns and transport restrictions disrupting vehicle production and distribution, new light-vehicle shipments in China plunged 43 percent to some 965,000 in April, with year-to-date volume dropping 4.2 percent to 6.51 million, according to the China Association of Automobile Manufacturers.

Retail sales, rocked by anti-pandemic measures, may shrink 19 percent to some 1.32 million in May, the China Automobile Dealers Association predicted last week.