China to extend 'old car for new' plan to 2010

Shanghai, August 14 (Gasgoo.com) China will extend its stimulus package for the automobile industry including "replace old car with new" program and "vehicles going to countryside" project beyond the end of this year, the government's industry regulator said Thursday.

The minister of industry and information technology Li Yizhong said at a news conference in Beijing yesterday that "China's subsidies to encourage residents in rural areas to replace their old cars with new ones should continue to help support the auto industry, as well as its nationwide "replace old with new" program."

"But we haven't decided whether to extend the tax cut on vehicle purchases, which will expire by the end of this year," Li said.

China cut the purchase tax on cars with engines of 1.6 liters and smaller from 10 percent to 5 percent beginning this January till Dec 31 this year.

An unnamed official of Chinese National Development and Reform Commission (NDRC), said earlier this week they wouldn't extent the purchases tax cut but will make some adjustments in related policies.

China's vehicle sales posted a 63-percent year-on-year growth to 1.09 million units in July, the fifth consecutive month for the volume to exceed the 1-million-unit mark.

"The fundamental reason behind the dynamic performance is the series of stimulus policies we rolled out," Li said, pointing to other incentives.