Automakers to deposit for "cars to countryside"

Shanghai, March 20 (Gasgoo.com) Chinese carmakers who join in the "vehicles to the countryside" program are asked to sign a contract with the regulatory bodies and deposit 500,000 yuan ($73,200) as a pledge for product and service quality, xinhuanet.com said today. The money is refundable upon the contract is fulfilled.

China has recently launched its "vehicles to the countryside" program, urging its automakers to sell more vehicles in the rural market as a means of boosting their auto sales, and has detailed the 5-billion-yuan subsidy plan for rural vehicle purchases. Farmers buying light trucks and minivans from March 1 to Dec 31 this year will get a 10% discount, with a subsidy ceiling of 5,000 yuan.

The contract to be signed by automakers with the industry regulators together will specify the vehicle quality, sales areas, sales outlets, after-sales services and other requirements. The car companies, especially the small ones who will sell their vehicles to the countryside under the subsidy plan, are required to pay 500,000 yuan each to ensure their fulfillment of the contract.

"The contract and deposit are quite necessary," said a sales executive of Changhe Auto, "as they will safeguard the interest of the rural customers." Changhe Auto will be one of the dozen automakers to gain from the rural subsidy policy -- the other major beneficiaries include SAIC-GM-Wuling, Changan, Hafei, Jianghuai, Chery, and Foton.

Following last weekend's announcement of the subsidy plan, China's light vehicle and minivan makers have started their promotional tours of the vast rural areas and are expanding their sales networks across the countryside. Fierce competition between these companies is emerging in the rural vehicle market.