On Tuesday, China’s State Council issued a policy package to help stabilize the economy. In the package, the Council put forward detailed policy measures and arrangements divided into six aspects, including monetary, financial, and consumption, and planned to see steady growth in major purchases such as automobiles and home appliances.
The Ministry of Finance and the State Taxation Administration of China also issued an announcement on reducing the vehicle purchase tax for some passenger cars. For passenger cars with a displacement of 2.0L and below (9 seats and below), whose purchase date is from June 1 to December 31 in 2022, and whose unit price (excluding value-added tax) does not exceed 300,000 yuan ($45030), will see its vehicle purchase tax halved.
Besides, the government will optimize the investment, construction and operation of charging piles (stations) for new energy vehicles while gradually building out the full coverage of charging facilities in all residential areas and commercial parking lots. The government also wants to accelerate the construction of charging piles at expressway service areas and passenger terminals.
Beijing will also completely rescind all local policies that restrict sales of non-local second-hand vehicles, lift restrictions on the movement of small non-operating second-hand vehicles that meet the National V emission standard nationwide, and improve the regulations on the registration, filing and vehicle transaction registration of second-hand vehicle market entities. The city is also looking to support automobile import port areas while improving the environmental protection information disclosure system of parallel imported automobiles.
Cui Dongshu, Secretary-General of the China Passenger Car Association, issued a document saying that by implementing the measures of halving the 60 billion yuan ($9 billion) automobile purchase tax, mainstream consumer groups should see some restoration of confidence, while the purchasing pressure of the mainstream consumer groups will be reduced. The result should be an uptick in sales by as many as 2 million units and normalize soon after.
Affected by the epidemic, in mid-May, the China Passenger Car Association predicted that the retail sales of vehicles would be about 19 million units in 2022, with a decrease of about 5% year-on-year. Through the implementation of many new policies such as preferential purchase tax and extended promotional efforts, domestic retail sales should reach 21 million units by the end of the year while the expected increment of the policy will reach about 2 million units compared with that without the policy in place.