Another Stimulus Year for Autos; Short-Term Gain but Increased Sales Volatility Beyond

The State Council announced on May 23 that the government plans to set aside CNY 60 billion to support the consumption of passenger vehicles, or PVs, in the form of vehicle purchase tax exemption without elaborating on vehicle types and how the subsidy works. We expect detailed policy to be released soon. Meanwhile, we note that since April, many local governments, such as Shandong, Sichuan, Jilin, Guangdong, and Jiangxi, have announced various supportive policies to stimulate auto purchase.