(Yicai Global) Nov. 15 -- China's National Development and Reform Commission has not proposed a reduction of the vehicle purchase tax rate by half to 5 percent, its spokeswoman Meng Wei said at a press conference today, refuting a media report to the contrary.
China is mulling slashing the vehicle purchase tax rate by half to revive the depressed auto market, Bloomberg News reported late last month, citing an insider.
China's auto industry has faced intensifying downward pressure in the second half. Output and sales dropped 10.1 percent and 11.7 percent, respectively, last month, continuing their third quarter decline, Meng said, citing the statistics.
Many factors jointly contribute to the recent decline in auto output and sales growth. At 235 million, China's car inventory is the second-largest in the world, and close to 30 million vehicles are produced and sold each year in the country, which is the world's largest market, so sustaining rapid growth is difficult, she added.
Stalling sales growth will help bring the market mechanism into full play to improve key firms' competitiveness, eliminate backward production capacity and promote industrial transition and high-quality development, though it exerts short-term pressure on carmakers' production and operations, Meng stressed.
The base figure was elevated in the same period last year when previous preferential policies for the low-powered passenger vehicle purchase tax triggered advance consumer demand, she noted.
Changes in the international and domestic economic situation have affected market expectations. These have had a combined impact on recent auto output and sales. A slowing economy, deleveraging and a strict anti-pollution campaign are also culprits, according to the China Association of Automobile Manufacturers.
China's car industry still has highlights in development, however. Exports keep rising at a high tempo. New energy vehicles are grabbing the spotlight, with September's output and sales rising over one-half on the same period last year, showing a buoyant trend in the industrial transition.
The ratio of vehicles per thousand Chinese is still lower than the world average, and the potential demand for replacement is still large, so China's auto industry has extensive scope for future development, Meng said.
Editor: Ben Armour