State authorities cut purchase tax for some models as manufacturers rack up bonuses
Chinese financial and tax authorities last week announced a halving of the purchase tax on eligible vehicles, prompting many automakers to increase their incentives in a bid to attract customers. As a result, 2 million more vehicles are expected to be sold this year than previously estimated, an expert said.
On Tuesday, the Ministry of Finance and the State Tax Administration issued a notice on reducing the purchase tax of certain passenger vehicles. The objective is to promote automotive consumption and support the development of the automotive industry.
According to the notice, the tax on the purchase of vehicles is reduced by half for passenger cars with a cylinder capacity of less than 2 liters purchased between June 1 and December 31 and whose price of the vehicle per unit, excluding value-added tax, not more than 300,000 yuan ($45,000). .
Taking a 2-liter vehicle priced at 300,000 yuan as an example, after halving the purchase tax, a customer can save about 13,000 yuan. If the purchase tax is halved for a 200,000 yuan vehicle, 8,850 yuan is saved.
The notice also specified the term “passenger car” – a vehicle designed to carry passengers and their luggage with up to nine seats, including the driver’s seat.
Unlike earlier preferential vehicle purchase tax policies covering new energy vehicles and passenger cars with engine sizes below 1.6 liters, the latest move is seen as a big incentive by insiders.
“Through the implementation of many new policies, such as purchase tax incentives, and through the efforts of the (following) seven months of promotion, the annual domestic retail sales will reach 21 million units in 2022, which is expected to increase by about 2 million units from that without policy,” said Cui Dongshu, general secretary of the China Passenger Car Association.
Due to the COVID-19 outbreaks, the CPCA estimated in mid-May that auto retail sales would stand at 19 million this year, down 5% year-on-year.
After the notice was issued, a range of automakers quickly reacted and increased preferential policies on the purchase tax reduction. They include Changan, Dongfeng, Chery and Volvo.
Changan announced that many of its best-selling models such as CS SUV, Eado sedan and UNI SUV can benefit from national policies.
Based on this, Changan launched a “duty-free car shopping festival”. From June 1 to July 30, customers who purchase models from the Eado Plus, CS75 and UNI series will receive a purchase tax subsidy of up to 120%. At the same time, customers can receive a shopping tax reduction voucher of up to 10,000 yuan and participate in lotteries to obtain a car shopping voucher worth up to 6,000 yuan. yuan.
Chery’s Jetour said the purchase tax of all its models will be exempted and an additional 5,000 yuan in subsidies will be provided for vehicles sold in the campaign.
Dongfeng Nissan has announced that all of its models will be exempt from purchase tax and have comprehensive insurance for a limited time.
Volvo said many of its models will benefit from the 50% purchase tax subsidy and some other preferential policies. As for its popular model, the XC90 SUV, free lifetime maintenance will be offered.