Chongqing- "Buying a car of 122,900 yuan (about USD 18,391) saved more than 10,000 yuan," said Qu Bo, a citizen at the Dongfeng Sokon 4S-Authorized car dealership in Jiangbei Chongqing, Southwest China. He bought a luxury version of DFSK Dongfeng Glory 580 on the spot recently.

Qu said that in addition to his car's 100% purchase tax exemption, he also received 4,350 yuan in cash subsidies, saving a total of 15,227 yuan.

Recently, the State Council, China's cabinet, issued a circular detailing a package of policies to stabilize the country's economy. The purchase tax of some passenger vehicles will be reduced by 60 billion yuan in a phased way.

On May 31, the Ministry of Finance and the State Taxation Administration announced the reduction of vehicle purchase tax for some passenger vehicles, announcing that from June to December 2022, the vehicle purchase tax will be halved for passenger vehicles with a displacement of 2.0 liters or less whose price (excluding value-added tax) does not exceed 300,000 yuan.

Chongqing Changan Automobile, Dongfeng Sokon, and other auto companies have taken the initiative to take measures based on existing national policies. For example, Changan Automobile has launched a purchase tax subsidy of up to 120%; Oshanauto Automobile has launched a car purchase benefit worth up to 20,000 yuan in addition to the purchase tax subsidy.

At the Changan 4S-Authorized car dealership store in Nanan District, an endless stream of consumers came to the store to buy cars, making the shopping guides very busy.

"Compared with April and May, the average number of people coming to the store these days has increased by at least two or three times," said a manager in charge. Most consumers are more interested in the Changan Yidong PLUS, CS75 series, and UNI series, and these models are within the scope of purchase tax preference of the state and manufacturer.

Demand consideration for family car replacement

Meanwhile, some consumers come specifically for new energy vehicles (NEVs). As early as January this year, the state introduced the policy of exemption from vehicle purchase tax for NEVs. NEV purchases will be exempt from vehicle purchase tax between January 1, 2021, and December 31, 2022. New energy vehicles are still popular.

"The increase in displacement in the preferential policy is beneficial for us to increase sales," said a person in charge of a 4S-Authorized car dealership of a joint venture brand in the Auto Expo Center. Most models of this brand have a displacement of 1.8T to 2.0T, and in the past, they were not included in the purchase tax preference, but now the tax exemption for each vehicle can reach 4000-7000 yuan, which is very attractive to consumers.

"Compared with the preferential policies for purchase tax issued by the state in the past, this time it is obviously stronger," said Chen Xueqin, executive vice president of the Chongqing Automobile Business Association.

Chen explained that the previous policies were aimed at passenger cars with a displacement of 1.6 liters or less. This time it was for passenger cars with a displacement of 2.0 liters or less, which excluding tax, is priced under 300,000 RMB. The focus is to encourage mass consumption and consider the demand for family car replacement. Chen said that the relevant policies of the state and manufacturers would benefit consumers and help dealers reduce costs and operational burdens.

"On the one hand, all dealers currently have a large inventory pressure of fuel vehicles. On the other hand, all manufacturers are also actively adjusting their structures and accelerating the transformation to the new energy vehicle sector," said Chen. "The state issued relevant policies now not only helps the industry to destock but also creates a valuable window period for automobile enterprises to adjust their structure."

(Wang Yuxuan, as an intern, also contributed to this report.)