New Chinese car tax unlikely to dent sales much

A new tax on cars with large engine displacements took effect this month, but the negative impact on sales will be small, experts said.

On Sept. 1, the tax on cars with engine capacities of 3 to 4 liters rose 10 percentage points to 25 percent, while the rate for those above 4 liters doubled to 40 percent.

The tax is intended to favor energy-efficient models.

Both imported and domestic cars are likely to cost more as a result of the tax hikes, according to Ding Hongxiang, general manager of the China Trading Center for Automobile Imports.

Higher prices will affect sales, but some of the tax burden will also be borne by manufacturers and dealers, said Ding.

State Information Center official Xu Changming said the car market was expected to grow about 14 percent in next four months. Nationwide sales would be about 9.5 million units, excluding exports.