China's policy to encourage auto-buying shows effect: ministry

• Source: Xinhua
• [15:50 February 13 2010]
• Comments

China's policy allowing car-buyers to enjoy both a purchasing tax cut and old-for-new trade-in subsidies, which took effect on Jan. 1, was generating good results with increasing applications and subsidy handouts, the Ministry of Commerce said Saturday.

In a brief statement posted on its website, the ministry said car buyers were actively responding to the new policy as there had been a significant rise in the number of subsidy applications.

Since Jan. 1 this year, both the average daily number of subsidy applications and subsidy handouts were more than double from that before the new policy was introduced, according to the statement.

The ministry did not give specific figures on either the number of applications or amount of subsidies handed out.

As of Feb. 12, more than 23,000 units had been sold, worth over3.3 billion yuan ( $483.2 million ), in which buyers enjoyed the two incentives, it said.

China adjusted the auto tax-cut policy and old-for-new program in January this year, with a view to boosting domestic consumption.

Starting Jan. 1, the purchasing tax rate on vehicles with engine sizes of 1.6 liters or less was set at 7.5 percent, 5 percent higher than last year but still 10 percent less than 2008 and before.

At the same time, China has also started offering higher subsidies to vehicle owners who swap old vehicles for new ones, between 5,000 yuan to 18,000 yuan per unit. Before Jan. 1, subsidies for the old-for-new program was 3,000 yuan to 6,000 yuan per unit based on the model of vehicle.

The government also has allowed car-buyers to enjoy both incentives, instead of just one in 2009.

China, the world's largest car market, continues to experience robust car sales. In January, China's auto sales more than doubled from a year earlier to exceed 1.6 million units, a new record, according to the China Association of Automobile Manufacturers (CAAM).