Auto sales incentives warm up car market

After gloomy sales in the second half of 2008, China's auto market started to warm up as 2009 dawned and the Lunar New Year approached.

Prices have been cut and favorable credit sales policies expanded to lure customers into showrooms.

Sales in Beijing's biggest auto market, Ya Yun Cun, have jumped since December with the trend continuing into January. Eight-hundred cars are sold every week, over 40 percent more than the same period last year. Retailers say they are keeping the prices low to create high sales volume.

Zhang Jing, marketing manager, Chery Beijing 4S Showroom, said, "We expect the Chinese New Year to be another good sales period. So we are keeping our discounts. Some models have 10 thousand yuan discounts, and others are 5 thousand yuan lower. Even the smallest QQ cars are 3 thousand yuan cheaper."

But most dealers have stopped those handsome year-end clearance discounts. They now offer fresh credit sales policies, allowing buyers to get no-interest loans.

Li Wenyan, market manager, Honda after-sales service Dept., said, "Everyday more than 20 customers apply for a car loan. It's a good response to our policy."

With a credit card, plus property and income statements, buyers can borrow up to 70 percent of a car's price and set the period of the loan for as long as in three years. This is becoming more popular, but with only 10 percent of car buyers in China financing vehicles through banks -- compared to 85 percent in the US -- dealers say the world's second largest auto market still has a long way to go in encouraging people to use credit.