Minivan makers lifting output for rural market

Shanghai, March 18 (Gasgoo.com) According to China's recently issued subsidy plan for farmers' purchases of vehicles, rural residents who buy light trucks and minivans from March 1 to Dec 31 this year will get a 10% discount, with a subsidy ceiling of 5,000 ($732) yuan. Now Chinese minivan makers are lifting their output to meet the rural market demands.

The subsidy policy will likely boost sales of the minivan, a widely-used vehicle in China's vast rural areas for commercial and passenger transportation. The leading Chinese minivan manufacturers such as SAIC-GM-Wuling, Changan, Changhe and Hafei will gain more from this subsidy plan. They have started their sales promotions in the rural areas and are raising their minivan output.

SAIC-GM-Wuling and Changan Auto claim more than 50% and 20% market shares respectively for such vehicles in China. China's largest minivan-maker SAIC-GM-Wuling 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 more than 50,000 minivans in each of the first two months this year, up 11.3% year on year, and the rural market accounted for about 70% of the sales. An executive of the company predicted Changan's minivan sales in 2009 would increase 25% y/y.

Changhe Auto and Hafei Auto, now integrated into the newly founded auto division of Aviation Industry Corp of China (AVIC), the country's aviation giant, will expand their sales networks across the rural areas and provide free repair service for their vehicles in the countryside.

This year, China will spend 5 billion yuan to subsidize farmers buying vehicles, especially light trucks and minivans. The country has about six minivan makers and more light-truck makers. These auto companies will compete more fiercely in the rural vehicle market.