New policy set to halt China’s car sales in 2011

PTI Beijing | Updated on November 09, 2017 Published on December 31, 2010

A file picture of cars in western Beijing   -  Business Line

The dream run in China’s car market is likely to come to a screeching halt in 2011 after Beijing announced the withdrawal of incentives on small cars with a ‘Made-in-China’ tag and imposed restrictions capping the number of new vehicles allowed on the roads.

The incentives given to the industry as part of stimulus measures in 2008 to cope with the global economic crisis are set to lapse, with China announcing a strict new policy to curb car consumption.

“Don’t be optimistic for China’s automobile market next year,” Mr Jia Xinguang, a Beijing-based independent auto analyst, said.

“At the expiry of the stimulus measures, especially the tax policy, there will be a restructuring in the auto market in terms of engine capacity,” he told the state-run <i>China Daily</i> today.

Mr Jia said that domestic auto makers, especially those with models with engine capacities of 1.6 litres or less, are faced with an uphill task to maintain the sales momentum in 2011.

“They have to make great efforts to improve quality and strengthen the brand of their cars,” he said.

China’s auto sales surged to 16.4 million in the 11 months to November, according to the China Automobile Industry Association.

Whole-year sales are expected to hit 18 million units in 2010, making the nation the world’s largest auto market for the second year in a row.

The China car market expanded by almost 30 per cent this year, but analysts have predicted that its growth will slow to 10 to 15 per cent or even lower in 2011, after Beijing came out with a strict policy to curb car consumption.

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Published on December 31, 2010
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