Policies igniting rigid demand for automobiles
- Source: CCTV.com
- [16:08 July 30 2009]
- Comments
"Compared to nine other industries where plans for revitalization and adjustments were introduced, and to other countries where policies encouraging automobile consumption were introduced, China's automobile industry has recovered faster and shown a trend of continuous growth, thanks to rigid demands,” said Xu Changming, director of the Marketing Information Division of the State Information Center, adding that when demands for new cars in a country mainly come from first-time buyers, then its demand is rigid, otherwise it is flexible.
In 2008, first-time buyers accounted for 83.1 percent of all purchases in China’s automobile market, compared to a merely 10 percent in Europe and the US. This is why China’s automobile market is thriving amid the financial crisis.
"Strong, rigid demand is the foundation of growth in the automobile market. The introduction of automobile-related incentives for consumers is one way for China to quickly propel its way out of the shadow of the current financial crisis," said Zhang Raoda, secretary of the National Passenger Car Market Information Association, adding that the reason for the growth in the passenger car market in February of this year is clearly due to government policies.
He further explained that from January to May, consumer sales of passenger vehicles with engines smaller than 1.0 liters and vehicles with 1.0 to 1.6 liter engines have increased by 46.6 percent and 52.7 percent respectively year on year. These two market segments enjoy two main preferential policies, a 50 percent discount on sales tax as well as subsidies for cars going to the countryside.
