Beijing Hikes Small Engine Car Tax, Maintains Preferential Rate

(Beijing) — China will extend a tax break for buyers of small-engine cars by a year, as the nation aims to boost sales of more-efficient, less-polluting vehicles as part of a broader effort to clean up the nation's air.

But the new preferential tax rate was higher than one under the original incentive program dating back to last year. The higher tax rate sparked a selloff in shares of some of China's leading domestic car makers who had hoped for a continuation of the lower rate.