Minivan makers to gain from rural subsidy plan

Shanghai, March 16 (Gasgoo.com) China will earmark up to 5,000 yuan (about $732) to subsidize farmers' purchases of light trucks and minivans, according to a plan aimed at boosting vehicle sales in the rural market, xinhuanet.com reported today. Minivan makers are expected to get more benefits from this stimulus policy. 

Details of the subsidy plan for farmers' buying of vehicles, first outlined earlier this year, were announced by the Finance Ministry and reported by state media over the weekend. Rural residents who buy light trucks and minivans from March 1 to Dec 31, 2009 will get a 10% discount, with a subsidy ceiling of 5,000 yuan.

The new subsidy policy would likely spur a surge in sales of the minivan, a widely-used and well-received vehicle in Chinese rural areas for commercial and passenger transportation. SAIC-GM-Wuling and Changan Auto claim more than 50% and 20% market share respectively for such vehicles in China and will likely be two of the biggest beneficiaries from the plan.

SAIC-GM-Wuling, GM's mini vehicle venture in China and the country's largest minivan maker for three straight years, sold 80,175 units in Feb, up 48.4% year on year, thanks to the stimulus policy. In Jan and Feb, the venture achieved sales of 155,343 units, up 33% y/y. Chevrolet Spark sold 10,115 units in the two months, up 97% y/y.

Also because of the auto stimulus plan, Changan Auto had sold 11.3% more units in the first two months this year than the same period last year. An executive of the company predicted Changan's minivan sales in 2009 would increase 25% y/y.

China will spend 5 billion yuan on rural vehicle sales subsidies and another 20 billion yuan on rebates to farmers buying electrical appliances to stimulate demand in the vast countryside, where over two-thirds of the nation's 1.3 billion people live.