Wednesday, January 14, 2009

State Council Wastes no Time Helping Automakers

In a recent post I noted that China's State Council was debating provisions to help the auto industry, and would probably get around to announcing the outcome after Spring Festival. Apparently they've been busy because the decision has been made already, and here are the results in a nutshell:

  • From 20 January 2009 until 31 December 2009, Passenger cars with a displacement of 1.6 liters and below will get a sales tax break -- a decrease from 10% to 5%.
  • The government will set aside 5 billion RMB to subsidize the purchases of 1.3 liter and below displacement vehicles by (and I'm translating here) "peasants who scrap their three-wheeled vehicles and low-speed delivery vehicles" in favor of these newer, low-emission vehicles.
  • Cancel "unreasonable rules that limit purchases of cars" (清理取消限购汽车的不合理规定). (No details given on which rules are "unreasonable".)
  • The government will spend 10 billion RMB over the next three years to support the development of "new resource vehicles" (新能源汽车) and components.
  • The government will continue to push for consolidation in both the assembly and parts industries.
I suppose they threw in the part about consolidation for good measure since the government has been begging for consolidation for years with no results so far. Again, until the central government is willing to do battle with local governments over this -- or at least provide some kind of an incentive -- I don't think we'll see many local governments willing to give up their prized car companies.

Sourced from articles in Jingji Guancha Wang and Caijing.