VEHICLE sales in China for July rose at the fastest monthly rate in three-and-a-half years, data from an industry association showed, thanks to a tax cut on small engine vehicles and a comparatively weak growth rate for the same period last year.

    Auto sales grew 23 percent year on year to 1.9 million vehicles in July from a year earlier, the highest monthly growth since January 2013, the China Association of Automobile Manufacturers said Friday.

    That compares to a 14.6 percent year on year rise in June and a 9.8 percent increase in May.

    China’s auto market struggled last year due to the slowest economic growth in 25 years and a stock market rout, before rebounding strongly in October when the government cut sales tax on cars with engines of 1.6 liters and below.

    In the first seven months of 2016, auto sales grew 9.8 percent as compared with the previous year, the association told a media briefing in Beijing.

    The industry was expecting a strong rise in July thanks to weak growth this time last year contributing to strong year-on-year comparisons, said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.

    “Last July was so low it was right after the stock disaster of late June,” Zhang said, referring to the speculative stock trading boom and bust in mainland markets that saw many individual retail investors lose large sums.

    “July and August (last year), no one wanted to buy cars.”

    Analysts and industry leaders question whether the rebound can continue if the sales tax expires at the end of 2016 as scheduled.

    In January, the association said it expected vehicle sales to grow 6 percent this year.(SD-Agencies)