Ministry: China to raise government's subsidy for trade-in vehicles

14:44, January 29, 2010      

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China will greatly increase government's subsidy for trade-in vehicles, with subsidies for some types of vehicle are to increase by 200 percent. Chang Xiaochun, director of the Department of Market System Development at the Ministry Of Commerce told reporters January 29, 2010.

"This year, trade-in subsidies for medium-sized trucks, large passenger buses, and cars with an engine size above 1.5 liters will be increased by 200 percent, rising from the previous 6,000 yuan to 18,000 yuan for each car." Chang said at the press conference.

He also admitted that in 2009, due to the impact of three aspects, the vehicle trade-in policy has not achieved very good results. These reasons are:

First, the vehicle trade-in subsidies are not attractive enough. Last year, consumers received a subsidy of between 3,000 yuan (439 U.S. dollars) and 6,000 yuan per vehicle to replace passenger cars, vans, and trucks that do not meet the country's emission standards, or for those vehicles that have been on road for 8 to 12 years. But in the second-hand car market, one such vehicle can be sold at 10 to 20 thousand yuan. Driven by the interests, some people would not make the trade-in choice.

Also, there are problems in coordination of policies. Last year, China adopted favorable taxation for car buyers and subsidy policies for trade-in vehicles. Consumers could only choose one of these preferential policies." Favorable purchase tax policy is relatively straightforward and offers relatively better discount, so the trade-in policy has been affected."

Last but not least, the policy has been implemented over a short time so effects are not obvious yet. It takes time from the vehicle trade-in policy to it shows results for observation. "The policy has been implemented for only one quarter, and this is a relatively short time." Policy effect has not been fully revealed.

To solve the above three issues, the Ministry of Commerce, Ministry of Finance, and the Ministry of Industry and Information Technology have discussed and decided they will continue to increase subsidies for some types of trade-in vehicles in 2010.

They also reached agreement to implement favorable taxation for car buyers and subsidy policies for trade-in vehicles at the same time, and promised under the premise of ensuring the safety of funds to make the operational processes as simple as possible.

"Auto industry has become a pillar industry of our country, I am still optimistic about the future of auto consumer market." Chang expressed his own views on the consumer market.

By People's Daily Online
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