Reader John B. sends in this Bloomberg News report on how tax cuts are fueling auto sales in China.
March 10 (Bloomberg) — China vehicle sales surged 25 percent in February, the first gain in four months, after the government cut taxes on some models, helping the country extend its lead as the world’s largest auto market this year.
Sales of passenger cars, buses and trucks climbed to 827,600, the China Association of Automobile Manufacturers said today in Beijing. The tally in the first two months rose 2.7 percent to 1.56 million, compared with a 39 percent decline to 1.35 million in the U.S.
China has halved retail taxes on small cars and drawn up plans to give out vehicle subsidies in rural areas to revive demand after auto sales rose at the slowest pace in a decade last year. Combined with the country’s wider 4 trillion yuan ($585 billion) economic stimulus package, the policies have caused General Motors Corp. to roughly double its forecast for China’s nationwide auto market growth this year.
“Consumers are regaining confidence because of the government’s stimulus policies,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai. “Still, vehicle sales may fluctuate in the coming months.”
That’s right, tax cuts in Communist China boost consumer confidence. Meanwhile, here at home . . .