By Justina Lee and Yifan Wang


Shares of several Chinese auto makers are up in early trade following reports that Beijing plans to cut taxes on some passenger vehicles in a bid to boost economic activity.

Shares of Geely Automobile Holdings Ltd. rose as much as 11% to HK$15.08 before paring gains to HK$14.76. Great Wall Motor Co.'s H-shares gained 12% to HK$13.26, while its A-shares were 2.8% higher at CNY34.95.

The increases come after state media reported Monday that Chinese officials in a recent State Council meeting planned to cut purchase taxes on some passenger vehicles for a certain period of time, waiving a total of 60 billion yuan ($9 billion) of taxes. The cuts would apply to internal combustion engine vehicles; new-energy vehicles in China aren't currently subject to purchase taxes.

"This will be one of the most effective ways to boost car demand," OCBC said in a research note.

Citi analysts called the move a "significant positive stimulus," saying it could cut taxes on internal combustion vehicles in half for one and a half years.

"We expect Geely and Great Wall Motor to be mostly benefit from this ICE stimulus," and "the market may switch preference from [new-energy vehicles] and upstream related names into the traditional ICE sector," Citi analysts said.

Citi raised its target price on Geely to HK$17.89 from HK$14.96, and to HK$29.10 from HK$24.80 on Great Wall Motor. It has buy ratings on both.

Shares of electric-vehicle makers are lower in early trading, with NIO Inc. slipping 7.2%, BYD Co. down 5.0% and XPeng Inc. off 8.3%.


Write to Justina Lee at justina.lee@wsj.com and Yifan Wang at yifan.wang@wsj.com


(END) Dow Jones Newswires

05-23-22 2349ET