• Geely is among the local Chinese automakers to benefit from the impending expiry of the tax cut.

Geely is among the local Chinese automakers to benefit from the impending expiry of the tax cut. (Photo : Getty Images)

China saw a surge in passenger vehicle sales for the eight straight month as consumers scrambled to buy small-engine autos ahead of a tax cut due to expire by the end of the year, boosting deliveries of domestic automakers.

Retail sales of cars, SUVs, and MPVs rose by 20 percent to 2.22 million units last month, China Daily reported on Wednesday citing data from the China Passenger Car Association (PCA).

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Deliveries rose 15 percent to 18.7 million units in the first 10 months, the report added.

The sudden increase is credited to the tax cut on vehicles with vehicles with smaller engines that is set to expire at the end of this year, even as Beijing said it is considering extending the rebate. Local carmakers such as Geely and Great Wall have also reported a surge in demand for their popular models like the Boyue and H6.

"Auto production was expected to accelerate in the fourth quarter in anticipation of an eleventh-hour sales surge as buyers rush to beat the tax cut's expiration at year-end," said Steve Man, a Hong Kong-based analyst with Bloomberg Intelligence. "Pricing in the passenger vehicle market in China is increasingly competitive. It appears the automakers are resorting to incentives to generate sales."

According to the PCA, wholesales of cars with engines smaller than 1.6 liters rose 26 percent in October, compared to just 16 percent for those with higher-capacity engines.

Geely, which has raised its annual sales target twice, posted almost double of deliveries to 96,158 units in October, while sales for Great Wall saw an increase of 31 percent to 104,844 units. Deliveries of Guangzhou Automobile Group Co climbed 33 percent to 158,096 units, while Chongqing Changan Automobile Co's jumped 20 percent to 293,902 units.

General Motors deliveries rose 5.7 percent and Ford Motor Co gained 14 percent, while Japanese automakers Nissan and Honda saw a surge of 16 percent and 40 percent in sales, respectively.