China's light-vehicle sales surged 13 percent year on year to 1.9 million units in October as the government's lower purchase tax on small cars lured buyers, according to the China Association of Automobile Manufacturers.

 

On October 1, China's central government halved the purchase tax to 5 percent for vehicles with engine sizes of 1.6-liters and below.

 

Because of the tax incentive, sales of compact vehicles jumped 17 percent year on year to 1.34 million vehicles in October. Sixty-nine percent of all vehicles sold last month qualified for the tax cut.

 

"The effect from the purchase sales tax cut has been positive and should last for a few months," said Yang Jing, a Shanghai-based associate director at Fitch Ratings. "China's economy is in transition and consumption will become a bigger part of its growth. Helping to boost auto sales is part of the government's plan."

 

Crossovers and SUVs remain China's hottest segment. In October, this segment's sales surged nearly 61 percent to 622,000 units.

 

Sedan sales edged up 0.2 percent to 1.05 million vehicles, while MPV deliveries rose 4.6 percent to 192,800 vehicles. But microvan sales continued to contract, falling 20 percent to 67,600 vehicles.

 

Through October, light vehicle sales in China topped 1.65 million vehicles, up 3.9 percent from the same period last year.

 

Chinese carmakers outperformed the market, and raised their share of sales by 2.1 percentage points from a year earlier.

 

This year, Chinese automakers gained share after introducing cheaper SUVs that competed with similarly priced sedans from foreign brands.

 

Great Wall, the biggest seller of SUVs in China, boosted October sales by 14 percent. General Motors, Ford Motor Co. and Hyundai Motor Co. also reported gains in their October deliveries, reversing recent declines.