China's auto sales slow in July

By Kim Young-gyo
HONG KONG, Aug. 9 (Yonhap) -- China's automobile sales slowed down in July, an industry group said Tuesday, as vehicle demand slumped after the government stopped offering incentives and introduced new limits on car purchases earlier this year.
The domestic sales of passenger cars, sports-utility vehicles and minivans dropped 6.1 percent on-month to 957,724 units in July, the China Passenger Car Association (CPCA) said.
The latest figure was a 3.6 percent increase from the same month last year.
The industry group attributed the decline in July sales to the end of tax breaks and incentives that dampened demand for new cars.
The Chinese government ended tax breaks for purchases of small cars at the end of 2010 and reimposed a 10 percent tax at the beginning of this year as part of its efforts to fight air pollution and ease ever-worsening traffic congestion.
The tax breaks, introduced in 2009 to buoy domestic demand amid the economic slowdown, had boosted China's auto market and helped it overtake the United States as the world's largest in 2009 and 2010.
"If the local government doesn't call off the limitation policy in three months, this kind of temporary relief will be seen in more second- or third-tier cities, and will seriously harm China's development of its automotive industry," said Rao Da, secretary-general at the association.
"China should find other ways to solve traffic and fuel-consumption problems, such as increasing the fuel tax to force drivers to use their cars less frequently," he said.
The CPCA said rising oil prices and car parts supplies from quake-hit Japan are also negatively affecting auto sales in China.
ygkim@yna.co.kr