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Will Cars Get Nearer to Common People in Coming 5 Years?
From the day when economical cars roll off the production line, they have become the focus of the public's attention. Does the recently published "10th Five-year Plan for the Auto Industry" mean that economical cars are allowed to get closer to the common people?
In a Xiali car store, many consumers, while inquiring about the functions of Xiali 2000, asked the sellers whether buying tax on economical cars would be cut. Regarding this question, the sellers mostly said: "It is said so, but we really don't know the exact time when the decision will begin to be carried out."
Economical Cars to Dominate Market
Sources from the State Economic and Trade Commission say that with the launch of "the 10th Five Year Plan for the Auto Industry", a series of policies encouraging auto consumption are under consideration.
Along with the development trend featuring the continuously accelerated process of China's industrialization and the improvement of people's living standards, car purchasing groups will surely expand steadily, sedan cars will become a main force boosting growth in auto demands, and the proportion of sedan cars to the total demands for automobiles will rise steadily. It is unlikely that there will be an explosive demand for sedan cars entering ordinary families. Rather, this will happen in an orderly and step-by-step manner. There will be a stable demand for middle- and high-class cars, but market share will drop to some extent, common cars, especially economical ones, will become dominant products in the market and the variety will tend to carry a diverse and specific character, market share will increase year by year.
According to a survey, the primary choices for domestic private car purchases will still be economical and practical cars. 71 percent of people want to buy the common type of cars valued at around 100,000 yuan each. At present economical cars like Sail, Xiali 2000, Qirui priced at about 100,000 yuan each, with more than 20 new models and new brands. Furthermore, some domestic and foreign car manufacturers, such as Ford, Nissan, and Changhe, are also itching to put out family cars worth about 100,000 yuan each.
It is also stressed in the Plan that priority development of future cars will be economical cars with discharging amount below 1.3 liters, with gas consumption per 100 km reaching the advanced domestic level and selling price standing at around 80,000 yuan, meeting State regulations on safety, energy saving and discharging amount and the requirement for private cars. With policy backing, apparently, future economical cars will play a leading role on the automobile market.
Tax Rate Reduction Gives "Green Light" to Price Cut for Economical Cars
Auto Industry Policy has clearly states that the State encourages individuals to buy cars, and will formulate, at opportune time, specific policies in accordance with China's auto industrial development and change in the market consumption pattern. However, China still lacks a complete policy encouraging car consumption. Some localities adopt protection policies to control the use of cars and mini-cars which are not produced by local enterprises, thus artificially carving up the market.
Arbitrary charge of fees and complicated car purchase procedures have stifled people's enthusiasm for car purchase and hampered the growth of market demands. Product variety, price, operational mechanism, market development, after-sale service cannot meet private car purchasing demands. Setting up a relaxed policy environment and encouraging individuals' active consumption will be the focal point of China's car consumption in the future.
Professionals of the auto industry say that price reduction for cars, whether they belong to the category of economical car or not, is the general trend in the future. In terms of tariff, although there is a five-year protection period for domestically made cars, tariff reduction on imported cars from the present 100 percent to 25 percent five years later does not begin after the expiration of the five-year period, but rather it begins in the first year. In fact, the rate of tariff cut is the largest in the first two years. Such being the case, the price for domestically produced cars must be lowered before the influx of imported cars.
The Plan also clearly states that to expand the private car market and encourage cars to enter common families, China should adopt a unified national car consumption policy as soon as possible, it is necessary to study ways to adjust the car consumption tax structure, and reduce the general level of tax fund. A unified national standard for the charge of various types of fees involving the purchase and use of cars should be set, and various unreasonable charges should be abolished. It is necessary to simplify car purchase procedures, standardize management and provide conveniences for the purchase, registration and use of cars. Fuel tax policy should be carried out as soon as possible to further perfect the auto credit consumption method.
An official with the Planning Department indicated that the relevant new auto industry policy is under busy revision. Apparently, the goal for a more reasonable price of economical cars will not be far from us.
By PD Online staff member Li Yan
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