Gasgoo.com (Shanghai April 15th)– China’s government may strongly cut down the subsidy for alternative energy buses by about 31.8% on average, according to some reports from Chinese media.
The subsidy cut may arise from some subsidy swindling cases. After Chinese media disclosing those subsidy swindling cases this year, relevant department has been conducting investigation, the result of which is expected to be released in the second half of April.
Insiders expect that subsidy cut can help to stem subsidy swindling. “When government subsidy turns out to be more than cost, alternative energy vehicles will become tool for swindling instead of for utility. Stemming subsidy swindling by subsidy cut can make automakers focus on market force”, said Cui Dongshu, Secretary of China Passenger Cars Association.
But this may not be good news for those automakers which rely on government subsidies to run their business. Data from China’s Yutong Group indicated that revenue of company reached RMB3.1211 billion yuan, a yearly rise of 21.31%. However, Yutong received government subsidy of RMB6.8565 billion yuan for developing and promoting alternative energy vehicles, which turned out to be double its net profit, last year. That alternative energy bus made good sales help BYD in China achieve net profit of RMB2.823 billion yuan with a yearly rise of 551.28%. The net profit attributable to shareholders of China Zhongtong Group reached RMB399 million yuan, a yearly rise of 42.8%. But government subsidy Zhongtong received from January to July had been more than net profit it made in a year.
Experts pointed out that automakers in China, especially those of small or middle size, should focus on upgrading products and cutting down production cost to make profits, considering China’s government will end subsidy for promoting alternative energy vehicles in 2020.
