As countries in Europe wind down their cash for clunkers programs, China is increasing the bounty on old cars. China’s Ministry of Commerce said that qualified car owners who trade in outdated or “highly polluted” vehicles will receive a subsidy between US$733 and $2635 this year, up from last year’s maximum $878, reports Shanghai Daily.
According to the paper, gasoline-powered cars that fail to meet China’s first generation emission standard (comparable to Euro I,) and diesel vehicles that do not meet the third generation emission standard (comparable to Euro III) count as “highly polluted vehicles.” Cars that do not meet Euro 4 are already banned from big cities such as Beijing or Shanghai.
Last year, China halved the tax on cars with an engine displacement of 1.6 liters or below to 5 percent. As a result, small cars were the driving force behind China’s impressive vehicle sales. For the first 11 months of last year, vehicle sales in China accelerated 42 percent to 12.23m units. China is expected to close out the year with well over 13m units sold. Starting in January 2010, the tax increases to 7.5 percent.
China is targeting to sell more than 15m vehicles in 2010. According to a survey of 21 analysts compiled by Reuters, the U.S.A. is expected to come in anywhere between 10.4m to 11.4m vehicles for 2009. J.D. Power and Associates expects 11.5m vehicles to be sold in the U.S.A. in 2010.
Due to the relatively young fleet in China, the impact of the cash for clunkers program on sales is expected to be small. Banning the heavy polluters from Beijing’s streets, along with other measures, improved air quality considerably.