How much stimulus does China's auto market need?

• Source: Gasgoo.com
• [16:03 September 04 2009]
• Comments

It can be seen as second step within the government’s new energy vehicle development program (after granting subsidies to car makers for R&D) to set the frame to make China the leading market for alternative energy cars, and to push domestic car manufacturers to occupy a new technology leadership position. This appears to be the only way to quickly close the technological gap to international car makers.

At this point only one passenger car model appears on the government list to be qualified for the purchase subsidy: BYD’s F3DM. In addition, consumers are still very doubtful about the reliability and value for money of alternative powertrain concepts.

A lot of efforts will have to be put in raising awareness and building trust among consumers, and to resolve peripheral uncertainties, such as recharging lots or battery replacement infrastructures, in order to benefit from the full potential of this new energy initiative.

In summary, the Chinese auto industry is one of the growth engines of the economy, and the passenger vehicle sector plays a critical role in it. The central government has been keen to make sure that the car market remains strong, and set considerable amounts of money aside to support its sustained development.

At the end, all good intentions are accompanied with uncertainties and risks, and the questions remains which and how much stimulus China’s auto market in its current state does really need.