March 16, 2009

China’s auto subsidies taking effect

China revealed details of its plan to subsidize auto and motorcycle purchases by rural residents, which experts said had already created a surge in sales.

The government said in January it would make $732 million available to subsidize purchases of vehicles, including light trucks and minivans for farmers, Xinhua reported Monday.

The plan revealed Sunday includes a 10 percent subsidy for vehicles and a 13 percent subsidy for motorcycle purchases. Farmers who purchase trucks or minivans between March 1 and Dec. 31 can expect a subsidy of 10 percent on the purchase with a maximum subsidy of $730 per vehicle.

The government limited the number of subsidized motorcycles to two per household.

Yang Dayong, the sales department deputy director at Chana Auto Co. Ltd, said minivan sales would likely grow 25 percent over a year ago.

ChangAn, which commands 21 percent of China's minivan market, has already sold 11.3 percent more vehicles in January and February than it did in the same two months of 2008, Xinhua said.