China will end tax break for purchases of small cars this year, according to Caixin. Last night the Ministry of Finance announced a tax increase from 7.5% to 10%.
The expected hike follows restrictions on car sales in Beijing, where the number of licence plates issued will be limited to 240,000 in 2011.
Why you should be worried is that China is the world’s biggest car market, at the heart of automakers’ growth projections.
Together these restrictions could have a major impact on car sales, especially if Beijing’s traffic-related restrictions catch on in other cities, according to analyst Dian L Chu. Beijing alone could see a 50 per cent drop in new car sales according to industry estimates.
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