Fuel reform expected to boost auto market

At least for some consumers, reforming the fuel tax could be a step in the right direction. And for retailers, it could also help to boost months of flagging sales.

It's a chilly winter day in Beijing. But Spring could be on the way for the car market. Expectations of a reform to fuel tax is drawing some interest from potential buyers.

One potential buyer said "I think it's good for car owners. I originally planned to buy a car in 2010, but I'm now considering bringing forward my plans."

Many think owning a vehicle will cost less, because they can control how much tax they pay by cutting down on how much they drive. And that's also good news for retailers.

Liu Youcheng, Researcher of Hongyuan Securities said "Overall, the reform will be good for companies that build highways. It's good for low-emission private car owners as well as high-emission business cars owned by companies. It's also good for the trains that transport goods, but not good for vehicles that do the same business. Meanwhile, it will force energy-intensive chemical industries to cut back on fuel consumption, by raising their production costs."

Investors say the fuel price reform favors the petrochemical industry, such as companies like Petrol China and Sinopec, because the reform is largely determined by market forces. They also think it's good news for alternative energy companies like nuclear, solar energy and wind energy.