Ford first-quarter China sales slump more than one-fifth as tax cut rolled back

Ford Motor Co said on Thursday that its China vehicle sales fell by 21 percent in the first quarter compared with a year ago, after a tax cut on small-engined vehicles was rolled back.

Ford trailed many of its competitors in China in the first quarter with Toyota Motor Corp <7203.T>, Honda Motor Co Ltd <7267.T> and others disclosing sales increases and the automakers' association reporting a 7 percent rise for overall sales.

Many in the industry had feared that consumers rushing to buy small-engine cars before a tax increase at the end of 2016 would lead to weaker sales in the first few months of 2017.

Roughly 70-75 percent of Ford cars sold in China qualified for the tax cut, which applies to vehicles with engine capacity of 1.6 liters or below, Ford Chief Executive Mark Fields told reporters in Shanghai on Saturday ahead of the release of Ford's March figures.

"We've always planned for the fact that (in) the first quarter there would be payback from the pull forward of sales into the fourth quarter (before the incentive was reduced)," Fields said, adding that sales would improve for the rest of the year.

Ford's March sales fell 21 percent year-on-year to 90,457.

The purchase tax for small-engined cars climbed to 7.5 percent this year from 5 percent in 2016 after the government stepped in to stimulate slumping sales. The tax will rise to the normal 10 percent rate next year.

Ford said in a written statement that its sales of vehicles that do not benefit from the purchase tax incentive rose by double digits.

(Reporting by Jake Spring; Editing by Stephen Coates)