(March 7, 2011) SHANGHAI — China's car market has been hit with higher fuel prices and higher taxes.

Sales fell in February for the first time in at least 16 months after fuel prices rose and the government ended incentives that supported vehicle sales, the China Passenger Car Association said today.

Sales of passenger cars and minivans declined 0.4 percent from a year earlier to 880,027 last month, the association said in an e-mailed statement. It was the first drop since at least September 2009, according to data from the group made available on its website.

China raised the sales-tax rate on small cars this year to 10 percent from 7.5 percent, phased out subsidies for vehicle trade-ins in rural areas, and increased retail gasoline and diesel prices on Feb. 21.

Lower taxes helped automakers including General Motors and Volkswagen increase deliveries last year as overall vehicle sales surged 32 percent in the world's largest auto market to a record 18.06 million.

Source: Bloomberg News