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SHANGHAI: China's auto sales surged 23.8% in June from a year earlier, the first increase in four months after authorities cut taxes and offered subsidies to encourage car purchases as COVID-19 curbs eased.

Sales in the world's biggest car market rose to 2.5 million vehicles in June, data from the China Association of Automobile Manufacturers (CAAM) showed on Monday.

Sales for the first half of the year, hit hard by stringent lockdowns in the commercial hub of Shanghai and other cities between March and May, were 6.6% lower than the corresponding 2021 period.

June sales were up 34.4% from May, with sales of new energy vehicles, among them electric, plug-in petrol-electric hybrids and hydrogen fuel-cell versions, climbing 129.2% from the previous year.

Last month the central government halved the auto purchase tax to 5% for cars priced less than 300,000 yuan ($45,000) with 2.0-litre, or *** aller, engines.

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That tax break has affected purchasers of close to 1.1 million vehicles, bringing a tax loss of 7.1 billion yuan ($1 billion) for the government, the official People's Daily said.

In May and June, some local governments started to offer subsidies to consumers willing to trade in gasoline engine vehicles for electric cars. Some cities have also expanded quotas on car ownership.

This month, the government said it would consider extending a tax break for electric vehicles and outlined plans to build more charging stations and encourage lower charging fees.

The CAAM data was broadly in line with Friday's CPCA data showing a jump of 22% for June from the same period a year ago. CAAM tracks a broader range of sales, including commercial vehicles, while CPCA focuses on passenger cars.

While June sales were buoyant, there are concerns that demand will once again be hit as COVID cases tick up with the arrival of the BA.5 Omicron subvariant in China.

Cities are imposing fresh curbs to rein in new clusters, ranging from business suspensions to lockdowns and Shanghai is bracing for another mass-testing campaign. - Reuters


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