Changan Auto, motorcycle firms join to go rural

Shanghai, March 2 (Gasgoo.com) Chongqing Changan Auto and its sister companies of motorcycles under China Ordnance Equipment Group Corporation (COEGC) have recently signed a joint strategic deal of delivering more of their vehicles to the countryside market, said xinhuanet.com today.

In January, the Chinese government encouraged automakers in the country to expand their growth in the rural market. As part of the auto sector incentives, China will earmark 5 billion yuan ($732 million) for subsidizing the "Vehicles to the Countryside" program this year, and the small cars with engines below 1.3 liters will have more reduction in sales taxes.

This support policy for the rural auto market has increased the sales of small vehicles amid the global financial crisis. In January, Changan Auto sold 51,646 small cars, growing 40% from a year earlier and reaching a record high in monthly sales. The company aims to sell at least 500,000 small vehicles in 2009.

Since last September, the global market demands for China-made motorcycles have decreased sharply. The Chinese motorcycle exports may take a long time to return to normal. To boost the domestic motorcycle market, the central government has also decided to subsidize the motorcycle purchases in the rural market.

The motorcycle is the major means of transportation in China's rural areas, which have been a huge market for the sales of motorcycles. China Ordnance Equipment Group Corporation (COEGC) has the largest number of motorcycle makers in China, with one-third market share. Its famous brands include Jialing, Jianshe, Qingqi, Suzuki.

Under the joint strategic deal signed on Feb. 28, COEGC's six motorcycle companies -- Jialing, Jianshe, Jinan Qingqi, Luoyang Beifang (North), Qingqi Suzuki and Jianshe Yamaha -- will deliver 6 million motorcycles to the rural market in the coming three years. Meanwhile, Changan Auto will provide 50,000 small vehicles for "motorcycles-to-the-countryside" marketing services.