Tax raise on smaller cars

China’s government will raise the sales tax on small cars. The tax raise from 5 to 7.5 percent is intended to curb an incentive that helped the car industry to grow for 26 years in a row.

The news hurt the shares of China’s large automakers, BAIC Motor Corp. and Geely Automobile Holdings Ltd., Guangzhou Automobile Group Co. and Great Wall Motor Co., China’s largest SUV maker.

Bloomberg reports that in China, consumers bought 21.1 million passenger vehicles in the first 11 months of the year, more than the 20.6 million units purchased in all of 2015. Numbers of the China Passenger Car Association. Analysts expect sales growth to be moderate to 3 percent in 2017, from about 15 percent this year.

Further reading on Bloomberg

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