Sub-1.6L cars ineligible for "old for new" subsidy

Shanghai, May 25 (Gasgoo.com) China announced on May 19 that it will subsidize consumers who replace their old cars and household appliances for new models. However, small cars with an engine of 1.6 liters and less, those with the sales tax halved to 5%, are not eligible for this new subsidy, state media said today.

The central government will spend a total of 5 billion yuan ($732 million) on subsidies to consumers who trade in older vehicles for new ones that are less-polluting and more energy-efficient. The budget for the subsidy program is an expansion from rural areas to cities and has increased from 1 billion yuan to 6 billion yuan.

The earlier subsidy program was introduced in March for rural buyers of minivans and light trucks. Areas initially qualifying for the "swapping old for new" subsidies include Beijing, Shanghai, Tianjin and several provinces in China's affluent coastal regions.
 
On January 20, China began to offer tax cuts from 10% to 5% for buyers of small vehicles with engines of 1.6 liters or less, measure that will continue until the end of this year. Therefore, the sub-1.6L vehicles which have enjoyed the sales tax cuts are not eligible for the subsidies when they are replaced for new ones.
  
The new subsidy policy is expected to not only boost the auto market demand but also improve air quality and increase energy efficiency. A slew of stimulus policies issued earlier this year have helped China's auto market recover in recent few months.