Regarding the current downturn in China's auto market, Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said: "Judging from the current situation, the period of rapid growth in production and sales may have passed, and low growth may be the norm for future development."
Auto stocks soar on rumors of halving purchase tax
In the quiet winter of China's auto market, on October 29, the reporter quoted people familiar with the matter as saying that the China Development and Reform Commission has submitted a proposal to consider halving the vehicle purchase tax. Earlier, Reuters also reported that “The China Automobile Dealers Association submitted a document to the domestic government in September, proposing to halve the vehicle purchase tax for models with a displacement of 2.0L and below to 5%.†Foreign media reports pointed out that Bankhaus Metzler "This is definitely good news, the market has been waiting," said Juergen Pieper, an analyst based in Frankfurt. If the purchase tax relief program is implemented, it will give a big boost to the sluggish Chinese auto market.
Under the influence of rumors that the purchase tax was halved, auto stocks rose collectively after the market opened on October 30. Among them, Great Wall Motor's share price rose 6.36%, Geely Automobile's share price rose 2.35%; GAC Group's share price rose 7.02%. In addition, on October 29, local time in the United States, Ford’s shares rose 6.3%, General Motors’ shares rose 5.1%, and German car companies such as Daimler, Volkswagen, and BMW all rose 4.1%-4.9%. In addition, the stock price of parts and components also rose, and the stock prices of Amberford, Delphi, BorgWarner, Visteon, and Goodyear all rose by 5%-8%.
On the day when auto stocks rose collectively, a person close to the National Development and Reform Commission denied the rumor to the media. Subsequently, at the "CADA2018 China Automobile Dealers Annual Conference" held on November 1, Xiao Zhengsan, vice president and secretary general of the China Automobile Dealers Association, also gave an official response to the rumor. He said that the China Automobile Dealers Association had indeed submitted to the National Development and Reform Commission the basic analysis and suggestions on the current domestic automobile development situation, but it only made three suggestions on behalf of the industry, and there was no "suggestion" widely rumored by the outside world. Cut the purchase tax on vehicles with displacements of 2.0L and 1.6L and below in half to 5%â€.
Small-displacement purchase tax incentives have diminishing effects
As we all know, before the "rumour of halving the purchase tax", my country has twice issued the policy of halving the purchase tax of vehicles with displacements of 1.6L and below. In January 2009, my country first introduced the policy of halving the purchase tax of vehicles with a displacement of 1.6L and below, which was cancelled in 2011. At the end of October 2015, the policy of halving the purchase tax of passenger cars with a displacement of 1.6 liters and below was launched again. Starting in 2017, the preferential purchase tax policy was gradually cancelled, that is, increased from 5% to 7.5%; in January 2018, it was restored from 7.5% to the original 10% level.
The first half of the purchase tax in 2009 had a significant boost to the auto market. That year, the growth rate of passenger car sales in the narrow sense increased by 47.2%. When the purchase tax was 7.5% the following year, the growth rate was 34.4%. The purchase tax returned to normal in 2011. Afterwards, the growth rate of passenger cars slowed down significantly. Since the implementation of the second purchase tax halving policy on October 1, 2015, the growth rate of passenger vehicles in the narrow sense reached 17.6% in 2016 and 2.7% in 2017. Stimulated by the purchase tax policy, domestic car sales increased significantly. In 2015, the annual sales volume of the automobile market exceeded 20 million for the first time, and in 2016, the sales reached 24.377 million. "The preferential policy of halving the vehicle purchase tax has an obvious stimulating effect on the sales of the automobile market, and it is also an important measure to regulate consumption in the automobile market." said Cui Dongshu, secretary-general of the Passenger Federation.
However, from 2017, the growth rate of domestic passenger car sales dropped from 17.6% in 2016 to less than 3%. Although the reduction and exemption of purchase tax can stimulate market demand, it has shown obvious weakness, and the boosting effect has gradually diminished. In this regard, analysts from Gasgoo Automotive Research Institute pointed out that after the purchase tax policy returned to 10% in 2018, the market growth rate should have slowed down. Under the overdraft effect of the purchase tax of small displacement, the market growth rate will further slow down.
Can the halving of the purchase tax save the car market?
If the halving of vehicle purchase tax becomes a reality, will it be possible to save the 2018 auto market? According to data from the China Association of Automobile Manufacturers, among the total sales of passenger cars in China last year, the sales of cars with a displacement of less than 1.6L accounted for about 70% of the total sales. In the current atmosphere of the domestic auto market continuing to slump, the policy of halving the vehicle purchase tax is undoubtedly the most direct and powerful way to stimulate and promote consumer car buying behavior. It can inject a boost to the domestic auto market. There are still many controversies in the development industry. Many experts said that similar policies can promote the growth of market sales in the short term, but in the long run, to fundamentally solve the problem, it is necessary to rely on the internal momentum of the market.
The China Automobile Dealers Association expressed its opposition to blindly emphasizing that in response to certain situations, the state has introduced some stimulative policies, which in turn lead to market volatility. Xiao Zhengsan emphasized, "As a distribution association, what we really look forward to is to rely on the internal growth momentum of the market to promote the sustainable development of my country's overall auto industry and auto market."
Xu Haidong, assistant secretary-general of the China Association of Automobile Manufacturers, also said in an interview with the media: "The China Association of Automobile Manufacturers does not support nor agree with the introduction of such short-term policies to stimulate the rapid growth of the auto market, because it can easily cause fluctuations in the auto market."
In fact, the current car ownership in big cities is nearly saturated. Especially under the weak economy and mortgage pressure, the market demand for new car purchases is not strong. Under the influence of the income of residents in third- and fourth-tier cities, the size of the domestic car market is actually close to stock market. Some people in the industry pointed out that due to the problem of car ownership, even if the preferential purchase tax policy is introduced, although it can stimulate the domestic car market to a certain extent, it is difficult to achieve the stimulation effect of the previous two purchase tax halving policies on the market. The pulling effect will not be particularly good.
In addition, if the policy of halving the purchase tax is resumed, it will also affect the orderly competition in the market. The industry insider said that the current market tends to be saturated with fierce competition in the auto market, and the development of the auto industry requires the survival of the fittest. If car sales are stimulated through policies, weaker car companies can continue to survive without making corresponding adjustments, which is detrimental to the development of these companies and the industry.
In this regard, analysts from Gasgoo Automotive Research Institute pointed out that the specific impact of the halving of vehicle purchase tax on the 2018 auto market needs to be looked at according to the situation:
1. Temporary halving of the purchase tax for models with a displacement of 1.6 liters and below: there is a slight stimulus effect in the short term, but it is easily weakened by negative factors, such as trade wars, currency devaluation, etc., which does not benefit the long-term auto market.
2. Permanently halve the purchase tax of models with a displacement of 1.6 liters and below: limited short-term stimulus. Because the impact of overdrafts in 2016 and 2017 is obvious and the base is high, it is difficult to stimulate the demand for car purchases in the short term in the case of a poor economy. In addition, the current price cut is even larger than the total discount when purchasing tax concessions in the previous two years, and the market performance is not good, indicating that even if there are concessions, the short-term situation will not be changed. In the long run, it only affects the proportion of the market structure (1.6L and below displacement vs. 1.6L above displacement) (the proportion of 1.6L and below displacement vehicles has been restored to 10% since the purchase tax this year, and has increased from the beginning of the year. 70% fell to 63%, and it will rise again if the purchase tax is halved).
3. The state can consider introducing systematic purchase tax in combination with future energy saving, fuel vehicle economy, environmental protection and other aspects: such as 1.0-1.4 liters, 1.4-1.6 liters, 1.6-2.0 liters and hybrid models, etc. Grading purchase tax concessions. It has a benign effect on the auto market, but the short-term effect will not be very prominent, but more to promote the development of the entire industry.
The vehicle purchase tax halving policy can play a certain role in boosting the automobile market in the short term by virtue of its promotional function, but to promote the long-term stable development of the market, in the final analysis, it needs to rely on the internal driving force of the market, and the purchase tax preferential policy actually needs to be more environmentally friendly. level force. As pointed out by the Passenger Federation, the environmental protection upgrade of private car consumption should be promoted through the vehicle purchase tax policy, and consumers should be encouraged to use low-emission vehicles, so as to jointly fight the battle to defend the blue sky.
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