China Knowledge quoted source citing an unnamed official with the National Development and Reform Commission, the country top economic planner said China, the world largest auto market will terminate the preferential purchase subsidy for cars with engines under 1.6 liters on January 1 2011.

Mr Su Hui an official at the China Automobile Dealers Association said that the country's auto sales will not increase as fast as the previous two years after the removal of the policy.

Reportedly, the CNY 3,000 subsidy on purchases by rural citizens may also expire on January 1 2011. China cut the subsidy for autos with engines less than 1.6 liters to 5% last year and maintained the subsidy at 7.5% this year.

The China Association of Automobile Manufacturers said China, which sold 13.64 million vehicles in 2009, saw its auto sales surge 35%YoY to 14.68 million units in the first ten months of this year. The country vehicle sales are likely to exceed 17 million units in 2010.

(Sourced from China Knowledge)