Sales tax hike has reduced imports of big cars

Shanghai, October 29 (Gasgoo.com) Since the Chinese government imposed higher sales tax on big-engine vehicles from September 1, the imports of fuel-guzzling cars, especially those with 4.0L-plus engines, have fallen sharply, said xinhuanet.com today, citing figures from China Customs.

From September 1, 2008 the tax on passenger vehicles with engine sizes greater than 4 liters was doubled to 40% from 20%. Those who sell vehicles with engines sized from 3 liters up to 4 liters have to pay a 25% tax, up from 15%. However, the sales tax on cars with 1.0 liter and smaller engines have fallen to 1% from the original 3%.

The higher sales tax on big-engine cars has reduced the imports of high-emission vehicles sharply in these two months. Shenzhen has one of the five biggest auto import ports in China. In September this year, the auto imports through Shenzhen Customs declined by 21.8% year on year, of which the imports of 3.0-liter and larger vehicles fell by a sharp 46.1% from one year earlier.

China's automobile import company said that the imports of 4.0-L vehicles have dropped most sharply since September 1 when their sales taxes increased. The import proportion of the 3.6-L and 4.2-L Volkswagen Touareg SUVs has changed from the previous 2:8 to the present 20:1, said the company's manager, adding that Chinese buyers of imported cars have shifted their attention back to smaller-engine vehicles.

According to an auto industry report, the global financial crisis is slowing the growth of Chinese economy and the country's auto imports are also falling accordingly. In the long run, the auto imports of China will be growing steadily, though the growth keeps slowing in the final three months this year.