China looks to boost low-emission vehicle sales

The Chinese government has approved a new plan designed to boost sales of low-emission vehicles, the official China Securities Journal revealed Tuesday.

Figures from the China Association of Automobile Manufacturers show that vehicle sales rose by just 6.7 per cent to 9.38 million last year, while the total was down 14.35 per cent year-on-year last month.

In response to the flagging demand, the Chinese cabinet revealed that it will use a range of fiscal measures to encourage consumers to purchase the cleaner vehicles, which make use of platinum-based catalytic converters.

The other major cornerstone of the plan, which was unveiled last month, will be to cut the number of major automakers currently operating in the country from 14 to ten through mergers.

According to the newspaper, it is hoped that the move will see sales and production both exceed ten million this year and grow by an annual average of ten per cent over the next three years.

The government will aim to ensure that the lower number of automakers includes two or three major groups capable of producing over two million vehicles, with four or five tasked with producing around one million.

The newspaper also quoted anonymous sources as saying that subsidies to the tune of five billion yuan ($732 million) will be issued between March 2009 and the end of the year to stimulate purchases in rural areas.

Chinese automaker mergers have traditionally been rare as local councils tend to own stakes in the companies and prefer to keep them independent.