VW Pushes China to Extend Tax Cut on Car Sales

Volkswagen AG tells reporters it has joined with the state-backed China Assn. of Automobile Manufacturers to lobby the country’s government to extend a tax cut on new vehicles with small engines.

The measure took effect last autumn. It lowered the purchase tax to 5% from 10% on cars equipped with engines that displace fewer than 1.6 liters. The reduction, which produced an immediate uptick in sales volume, is scheduled to expire at the end of this year.

Jochem Heizmann, who heads VW’s China operations, reiterates that the company plans to invest €4 billion ($4.5 billion) in the country this year to expand local production capacity. Bloomberg News notes that VW’s global diesel emission scandal has had little impact on its sales in China, where it doesn’t market many diesels.