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Chinese auto sales weaken in January as sales tax rises

In this Feb. 6, 2017 photo, workers assemble Honda Civic cars at Dongfeng Honda Automobile assembly plant in Wuhan in central China's Hubei province. The China Association of Automobile Manufacturers said Monday, Feb. 13, 2017 the sales in the world's biggest auto market shrank 1.1 percent in January compared with a year earlier to 2.2 million (Chinatopix via AP)

China's auto sales shrank in January following a sales tax increase, an industry group reported Monday.

Sales in the world's biggest auto market declined 1.1 percent from a year earlier to 2.2 million, compared to December's 9.1 percent expansion, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, rose 0.2 percent from a year ago to 2.5 million.

China's auto sales rose 15 percent last year after Beijing cut in half a 10 percent sales tax on small-engine vehicles. The government restored part of that reduction in January, raising the tax from 5 percent to 7.5 percent.


Demand for SUVs helped to offset weakness in sedan sales.

SUV sales rose 10.5 percent in January to 881,000, while sedan sales shrank 3 percent to 1.1 million, according to CAAM. Sales of lower-priced Chinese brand SUVs rose 15.2 percent to 543,000.

China's trade figures can be distorted by the Lunar New Year holiday, which falls at different times in January and February each year. This year, the two-week holiday began Jan. 27, depressing retail activity in January, while last year's break didn't begin until Feb. 7.


"January was an unusual month with the earlier timing of the Chinese New Year holiday and the impact of the reduced tax incentive," Ford Motor Co.'s vice president for sales, Peter Fleet, said in a statement last week.

  • General Motors Co. reported earlier that January sales of GM-brand vehicles by the company and its Chinese partners fell 24 percent to 321,264. It blamed the Lunar New Year sales lull.
  • Ford Motor Co. said its sales were off 32 percent at 88,432 vehicles.
  • BMW AG, Europe's biggest luxury brand, said sales of BMW- and Mini-brand vehicles rose 18.2 percent to 51,345, exceeding 50,000 for the first time.
  • Nissan Motor Co., the most popular Japanese brand in China, said sales declined 6.2 percent from a year earlier to 119,411 vehicles.
  • Toyota Motor Co. said its sales rose 8.1 percent to 101,800.

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