Recent government measures could boost the alternative-energy bus industry.

The government will give public-transport companies and government agencies as much as 600,000 yuan ($88,000) in subsidies for each alternative energy bus they use.

Li Haiping, chairman of Zhongtong Bus Holding Co Ltd, said the subsidies will help companies get over the high-cost hurdles involved with initially producing green-energy vehicles.

Share prices of listed bus manufactures including Zhongtong Bus and Beiqi Foton Motors rose following the move.

"The policy is good for bus makers", said Qin Pan, brand manager of the Shandong-based Zhongtong.

"It will boost demand for alternative-fuel vehicles," he said.

The funds will be available for electric, hybrid and fuel-cell vehicles used for public transport and sanitation services in 13 cities, including Beijing, Shanghai, Chongqing and Shenzhen, according to a statement on the Ministry of Finance's website. Fuel-cell buses will get the highest subsidies.

Zhongtong produced and sold more than 20 alternative-energy and electric buses last year but plans to produce 200 to 300 such buses this year.

"The company could earn an additional 300 million yuan, 15 percent of this year's total projected income," said Li.

The government of Jinan in Shandong provinces are reportedly considering buying 320 renewable-energy buses for the 11th National Sports Games in October. Zhongtong may obtain most of the orders due to its good relations with the local government, said industry insiders.

The China Association of Automobile Manufacturers predicted there may be 600 green-fuel buses in China by the end of 2009 and 1,000 by the end of 2010. Beijing-based Beiqi has already won an order for 450 hybrid buses from that city's public transit body.

The company plans to build a new factory and expand its annual hybrid bus output to 1,000 units, according its website.

"The government subsidies are big enough for buyers to reduce costs," said Yao Hongguang, an analyst from Shenzhen-based Ping'an Securities.

But financial policy alone may not be enough, said Yao.

"There should be other ways to promote green buses, such as administrative orders for public transportation organizations to purchase them," he said.

(China Daily 03/16/2009 page8)