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SHANGHAI, July 7 (Reuters)China on Thursday announced a raft of new steps to spur consumer demand for cars, saying it would consider extending a tax break for electric vehicles and plans to remove some restrictions on second-hand car sales.

The Ministry of Commerce made the announcement as part of a joint statement with 16 other departments including the finance and industry ministries.

The world’s largest car market has been hit hard in recent months by stringent lockdowns in Shanghai and other parts of the country to curb the spread of Omicron coronavirus variant.

As part of the new efforts, authorities last month halved the auto purchase tax to 5% for cars priced under 300,000 yuan ($45,000) with 2.0-litre or smaller engines.

Buyers of certain fully electric and partly electric vehicles have not had to pay the purchase tax since 2014. A plan to reinstate it next year may now be scrapped, the ministry said, confirming a stance first flagged last month by the country’s cabinet.

But the ministry statement did not make a mention of any extension of subsidies for what China calls new energy vehicles – a programme that has been credited with supercharging the sector’s growth.

Reuters reported in May that authorities were talks with automakers about extending the programme.

The commerce ministry also said it would encourage the replacement of older vehicles and increase credit support for car purchases.

(Reporting by Brenda Goh in Shanghai and Sophie Yu in Beijing; Editing by Edwina Gibbs)

((brenda.goh@thomsonreuters.com; +86 (0) 21 2083 0088; Reuters Messaging: brenda.goh.thomsonreuters.com@reuters.net))

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