By on December 5, 2010

China’s car dealers will be mobbed tomorrow, and the run on the lots will last until the end of the year. Shanghai Daily [sub] reports that it is now – semi – official that the Chinese government “will cancel the preferential purchase tax for vehicles with engines under 1.6 liters on January 1 next year.” Shanghai Daily has it from Xiaoxiang Daily News, which heard it from an unidentified official with the National Development and Reform Commission. But it will be enough to incite a stampede to lock in the savings while they last.

The 3,000 yuan (US$455) subsidy on purchases by rural citizens may also expire on January 1, 2011. This had done a lot to sell cars in areas where they don’t even have car dealers.

The measure does not come unexpected. For the first ten months, auto sales rose 34.76 percent to 14.68m units in China. The year is expected to close out anywhere between 17 and 18 million cars sold. This market doesn’t need incentives. However, announcing the cancellation of the incentives now will provide for a year-end sales eruption that might drive the market above 18m.

China lately has been undertaking measures to cool down an overheating economy. In the big cities, real estate prices have mostly stopped climbing due to measures to curb speculation. Interest rates are expected to go up.

Also up: The average car plate price in Shanghai. In November, it stood at a record 45,291 yuan, ($6,800). Also of concern: Rising food prices, and worker shortages. China Daily reported that in the Pearl River delta cities of Guangzhou, Shenzhen and Dongguan alone there is a worker shortfall of about 550,000. One reason: The huge infrastructure programs provided jobs closer to home, which cuts down on the number of migrant workers.

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6 Comments on “China Cancels Handouts For Cars, Expects Last Minute Stampede...”

  • avatar

    Bertel, you must spend as much time sourcing the amusing and provocative images as actually writing the articles themselves!  I, for one, appreciate it!

  • avatar

    why does the country with the largest growth rate in car sales and that still imports more cars than it produces need a car stimulus program?
    How long has this been going on and how much of the growth was due to this program?
    I know the excuse here is to promote fuel efficient and lower emission cars, but since in the past there were barely any cars I don’t think the program takes out too many old smoky clunkers. but we can’t blame a communist government for impacting the market negatively as long as the US is not much better…

    • 0 avatar

      why does the country with the largest growth rate in car sales and that still imports more cars than it produces need a car stimulus program?
      Huh? China imported maybe 700K  of the  13.7m it sold last year, off-set by approx 300K in exports. The vast majority is made and consumed at home. And no, as described above, a stimulus program is no longer necessary.

    • 0 avatar

      sorry, I meant to write “imports more than it exports”

  • avatar

    Please don’t stampede, those go in the charm box.

  • avatar
    GS650G,  one of my favorite websites.
    Maybe the Chinese are getting ahead of a problem before it takes root.

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