China Cancels Handouts For Cars, Expects Last Minute Stampede

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Panzerfaust Panzerfaust on Dec 05, 2010

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

  • GS650G GS650G on Dec 05, 2010

    www.Engrish.com, one of my favorite websites. Maybe the Chinese are getting ahead of a problem before it takes root.

  • TCowner We've had a 64.5 Mustang in the family for the past 40 years. It is all original, Rangoon Red coupe with 289 (one of the first instead of the 260), Rally Pac, 4-speed, factory air, every option. Always gets smiles and thumbs ups.
  • ToolGuy This might be a good option for my spouse when it becomes available -- thought about reserving one but the $500 deposit is a little too serious. Oh sorry, that was the Volvo EX30, not the Mustang. Is Volvo part of Ford? Is the Mustang an EV? I'm so confused.
  • Mikey My late wife loved Mustangs ..We alway rented one while travelling . GM blood vetoed me purchasing one . 3 years after retirement bought an 08 rag top, followed by a 15 EB Hard top, In 18 i bought a low low mileage 05 GT rag with a stick.. The car had not been properly stored. That led to rodent issues !! Electrical nightmare. Lots of bucks !! The stick wasn't kind to my aging knees.. The 05 went to a long term dedicated Mustang guy. He loves it .. Today my garage tenant is a sweet 19 Camaro RS rag 6yl Auto. I just might take it out of hibernation this weekend. The Mustang will always hold a place in my heart.. Kudos to Ford for keeping it alive . I refuse to refer to the fake one by that storied name .
  • Ajla On the Mach-E, I still don't like it but my understanding is that it helps allow Ford to continue offering a V8 in the Mustang and F-150. Considering Dodge and Ram jumped off a cliff into 6-cylinder land there's probably some credibility to that story.
  • Ajla If I was Ford I would just troll Stellantis at all times.
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