China’s decision to adjust consumption taxes on vehicles is unlikely to affect overall vehicle demand, according to Merrill Lynch, reported by AFX news.
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However manufacturers are likely to shift their production strategies towards cars with smaller engines.
The Ministry of Finance announced yesterday that, as of April 1, consumption tax on vehicles of 1.0 to 1.5 liter will be lowered to three percent from five percent, while those with engines above 2.0 will be subject to taxes of nine percent to 20%.
Merrill Lynch said that Geely and Chongqing Changan Auto will be the major beneficiaries of the tax change. The biggest losers will be Great Wall Auto and Brilliance China.
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