New York Times: The Chinese government will increase existing taxes and
impose new ones on April 1 for everything from gas-guzzling vehicles to
chopsticks so as to improve the country's environmental record, conserve energy
and narrow China's wide gap between rich and poor.
The biggest commercial effect of the new taxes is likely to fall on sport
utility vehicles and luxury sedans. China is reducing slightly its tax on
vehicles with an engine of 1 to 1.5 liters, to 3 percent from 5 percent, while
leaving the rate unchanged for slightly more powerful engines and raising rates
for those with the most powerful engines.
The tax rate will climb to 20 percent, from 8 percent now, for vehicles with
engines over 4 liters.
The taxes are likely to hit foreign automakers more than Chinese automakers,
which tend to produce models with smaller engines. American automakers, with
some of the largest models, may feel the greatest impact.
The big question for automakers is how much of the tax to pass on to
consumers, as the tax is collected from the manufacturers. With a week and a
half remaining until the new tax takes effect, marketing executives were
scrambling on Wednesday to assess the impact and no automaker immediately
announced price increases.
"We are doing the calculations and assessing the impact, and on the other
hand watching the actions of our competitors," said Kenneth Hsu, a spokesman for
Ford's China operations, which sell everything from compact cars with 1.6-liter
engines to Lincoln Navigator full-size SUVs with 5.4-liter engines. (Full text )
Bloomberg: The government of the world's third-largest vehicle
market is trying to encourage consumers to choose cars with smaller engines to
cut fuel consumption as rising incomes and falling car prices make cars
affordable to more people.
The move may hurt the assemblers of sports-utility vehicles and luxury sedans
such as Ford Motor Co.'s Volvo unit, General Motors Corp.'s Cadillac sedans and
Bayerische Motoren Werke AG's 3-Series and 5-Series cars. Volvo this week
announced a plan to make the S40 luxury sedan in southwestern China's Chongqing
city. (Full
text)
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