China’s Ministry of Commerce is mulling over incentives for old car replacement in order to boost China’s car market. Reports in China suggest that possible measures are also being considered in the context of longer-term aims, such as encouraging the consumption of smaller and more environment friendly cars.
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A Xinhua news agency report also said that other related government departments are planning on supportive measures for the auto industry, including the cut or removal of vehicle purchase tax and promoting auto finance business.
Details of any scrappage scheme remain to be worked out, but there are also indications that Chinese industry commentators see lessons for China in what has happened in the US.
“We used to believe medium-sized cars would have the biggest market in China, but actually small cars have the greatest potential in terms of energy efficiency and price,” senior engineer Chen Yilong of the Society of Automotive Engineers of China told Xinhua in December.
The US auto makers’ plight stemmed from their decades-old love affair with big cars while Japanese carmakers gained a stronghold by appealing to America’s fuel-conscious consumers, said independent auto analyst Jia Xinguang.
“US car makers should not have given up the market for small vehicles,” said Jia, who urged Chinese auto makers to follow the path of Japan in terms of safe, fuel-saving technologies.
“The fall of the US car industry is not a recent thing; it has been going on since the 1970s, when crude oil prices almost tripled because of output cuts by major oil producers,” said Jia.
Improved technologies are needed in China and the government should give policy support to hybrid vehicles using new energy sources, according to Chen.
He also warned that domestic brands could be disadvantaged if the technology used in compact cars didn’t catch up with global rivals.
Xinhua said the National Development and Reform Commission has mapped out a plan to boost vehicle consumption, targeting an annual rise of car sales higher than the country’s gross domestic product in the next three years.
The plan included cutting consumption taxes on low-emission and economical cars and supporting hybrid vehicles, the report added.
