China Launches Plan to Spur Car Demand

China announced new plan of new steps to spur the consumer demand for cars, and China said it will be considering extension of a tax break for electric vehicles and outlining the plans for building more charging stations and also encouraging lower charging fees.

The plans, which are announced by the Ministry of Commerce of China as part of a joint statement with 16 other departments, along with boosting the shares of the automobile companies of China, with shares of Geely surging 6 percent and shares of Great Wall Motor increased by 4 percent.

The largest car market in the world has been affected hard in recent months by stringent Covid-19 lockdowns in Shanghai and several other parts of the country to stop the spread of the Omicron Covid-19 variant.

As part of the new efforts, the authorities of China halved the automobile purchase tax to 5 percent for cars priced under 45,000 dollars with 2 litre or smaller engines. The buyers of certain fully electric and hybrid vehicles have not had to pay the purchase tax since 2014. A plan to reinstate the tax in 2023 might now be scrapped, and the ministry also confirmed a stance first flagged by the cabinet of China.

Decreasing the tax has helped the market to rebound the passenger car sales in June 2022 jumping 22 percent from a year earlier to 1.9 million units of the vehicles in China.