A government economy boosting plan, unveiled in China on Wednesday, includes measures to boost vehicle sales.
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The government also said it would push for consolidation in the steel industry whichh now faces over-capacity as global prices fall.
The State Council said it would temporarily halve sales tax on cars with engine sizes under 1.6 litres to 5% from 20 January until the end of the year.
Owners of high-emission vehicles trading up to more fuel-efficient and cleaner models will get one-off cash subsidies totalling RMB5bn (US$732m), Reuters reported.
“To speed up the consolidation and revival of the auto industry, China must implement an active policy to boost consumption,” the council said in a statement.
Falling consumer confidence slowed passenger car sales growth 7.3% in 2008, the first year of single-digit growth in over 10 years.
The council added it hoped the measures would also improve Chinese automaker competitiveness while boosting own-brand models plus vehicle and parts exports.
It would also set up a RMB10bn fund to promote new technology, including renewable energy, over the next three years, while supporting the eventual volume production of electric vehicles, the report added.
