Top Biz News
Subsidies drive sales of minivans
By Li Fangfang (China Daily)
Updated: 2010-01-11 07:58
 |
Large Medium Small |
|
|
|
A familiar site in China's countryside but not for much longer as farmers turn to four-wheeled forms of transport thanks to generous government support. [CFP] |
Zhang Jilong's new year resolution is to buy a light-duty truck, taking advantage of the government's stimulus measures on vehicle purchase in rural regions.
"I didn't expect the government to prolong the favorable policy and raise the subsidy," said the owner of a small brickyard in Yancun village, Weinan, Shaanxi province.
"But thanks to it, purchasing a light-duty truck to replace my three-wheeled carrying vehicles will be a good buy." Zhang bought a Hafei Minyi minivan last May, saving more than 4,000 yuan, thanks to the government subsidy from the 30,000 yuan deal.
"I hesitated for two years over whether I should change the old three-wheeled vehicles. Now, a golden opportunity has come along," he said.
Zhang said that since the government launched the policy to encourage farmers to buy vehicles last March, more than half of his fellow villagers have rushed to dealers to buy cars, minivans or light trucks.
"In recent years, farmers' incomes have increased rapidly," he said. "They have almost doubled. We can afford new vehicles and can consider replacing the outdated and unsafe three-wheeled farming machines we have been using. For us farmers, several thousand yuan is a fortune, and also the tipping point in helping us make a decision."
Xu Wangju, who has a 15-mu orchard in Liquan, Shaanxi province, a famous apple growing area, said: "In the past, the three must-haves for marriage in the countryside were a television, refrigerator and washing machine. However, when the government last year began to subsidize the auto industry heavily, vehicles became popular as betrothal gifts in our area.
They suggested a bright future after marriage.
"It makes a huge difference. Instead of waiting here at our orchards for the fruit dealers, we now transport the apples directly to the wholesale market. The difference in price can be more than 300 percent.
"Although we will have spent money on buying a vehicle, we earn much more profit through this convenient and direct transportation. This initiative also helps us farmers get out of our villages."
Last January, the central government announced that it would provide 5 billion yuan to subsidize rural residents' automobile and motorcycle purchases by 10 and 13 percent respectively of the total price.
The government also halved purchase tax on vehicles with engines of 1.6 liters or less. They make up more than half of the market and are mainly bought by people living in the countryside.
In March, the Ministry of Finance issued an order that farmers who buy light-duty trucks and minivans from March 1 to Dec 31 should get a 10 percent discount, with a subsidy ceiling of 5,000 yuan.
Further subsidies of 2,000 and 3,000 yuan respectively can be used to replace old three-wheeled and four-wheeled farming vehicles with small, 1.3-liter or less engines.
The stimulus immediately boosted auto sales across China's vast rural regions and gave the country's auto industry a shot in the arm.
It helped China's automobile sales to exceed an unexpected 13 million units last year, enabling the country to surpass the US as the world's biggest auto market.
Analysts forecast that the total sales of minivans, the model most subsidized by the government, would reach 2 million units for the whole of 2009.
Industry analysts also predicted the trend would continue this year with an increase of at least 15 to 25 percent on last year.
"We have never before experienced as good a time as last year," said Xiao Zhang, a salesman for Changhe minivan in Xianghe, Hebei province.
"The policy changed our sales behavior from heavily promoting our products to just waiting here in the dealer stores for the customers to stream in."
Xiao told China Daily that sales in his store more than doubled in 2009 from a year earlier.
"Although we saw on the television that the automobile industry suffered a tough year in the West, brisk sales here in China provided me with a busy but happy year with the highest salary and bonus since I sold my first vehicle three years before," he said.
