China's vehicle sales rose 7.7 percent last month as demand was spurred by a tax cut on purchases of small passenger cars and ahead of the Lunar New Year.

 

Wholesale deliveries of passenger and commercial vehicles climbed to 2.5 million in January, according to the state-backed China Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3 percent to 2.23 million, while commercial vehicle sales declined 3.4 percent to 303,600, it said.

 

Auto sales climbed during a period when China's stocks posted their worst month since October 2008. Last year, a stock market rally initially soaked up funds meant for large-ticket purchases. An ensuing stock market rout depressed consumer spending.

 

Vehicle demand rebounded after the government in October cut the purchase tax on small vehicles. Last month, the association predicted vehicle sales would gain about 6 percent this year, faster than the 4.7 percent pace in 2015.

 

Sales of passenger vehicles may rise in line with or slightly better than the economy's growth rate this year, said VW China chief Jochem Heizmann last week. The government is targeting an economic expansion of 6.5 to 7 percent in 2016.

 

Sales in January and February are not comparable to year-earlier sales because of the weeklong national Lunar New Year holiday, which falls on different days each year.