Demand for SUVs and cheaper tax on purchases stem slide

September vehicle sales in China grew slightly compared to the same period last year, reversing a four-month decline.

The growth was driven by an burgeoning demand for sport utility vehicles and the expansion of Chinese brands.

Sales volume of passenger cars last month grew by 3.26 percent year-on-year to 1.75 million units. The accumulated volume over the first three quarters totaled 14.55 million, 2.75 percent more than the same period in 2014.

"Some dealerships said the discounted purchase tax boosted car sales," said Dong Yang, secretary general of the China Association of Automobile Manufacturers, at a news conference on Oct 13 in Beijing.

The central government launched a stimulus measure, effective from Oct 1, to halve the tax on vehicle purchases to 5 percent for passenger vehicles with engines that are 1.6 liters or smaller.

"Reducing taxes will help stimulate tens of thousands of sales of small vehicles," said Zhang Yu, managing director of Automotive Foresight (Shanghai) Co Ltd, a market research firm.

Compared to the same period last year, sales this September of SUVs jumped almost 58.8 percent to 566,500 units. In August, SUV sales grew by 45.58 percent year-on-year.

Total SUV sales surged by nearly 46.7 percent to 4.08 million, while sedans and multipurpose vehicles trended downward.

Sales of Chinese brand SUVs soared by 82 percent through the first nine months to 2.15 million units and for the first time took a majority of the market share - 52.8 percent.

"Chinese brands have taken the lead in China's SUV market. The central and western regions, and the counties in eastern region are the new sources of growth and provide us with a vast market to explore," said GAC Motor Co's General Manager Wu Song. "As the quality of Chinese-branded cars catch up to global levels, Chinese automakers should constantly elevate their quality and persist in research and development to consolidate their position."

Among the joint ventures, several Sino-Japanese companies registered growth through the first three quarters, according to CAAM. Honda sold 694,807 units, a jump of 34.1 percent year-on-year, while the world's top auto brand Toyota sold 792,200 units, up 11.5 percent. Nissan sold 858,700 units, up 1.8 percent.

The top sellers through the first nine months were: Great Wall Motors' Haval H6 SUV with 252,800 units sold from January to September; Shanghai-Volkswagen's Lavida with 265,500 units sold; and Shangqi-GM-Wuling's Hongguang with 443,800.