Farmers taste the sweetness of policy support

"I never thought I could buy a car," a Chinese farmer told Los Angeles Times reporters after he drained his savings to buy a Wuling micro-minivan.

In recent months it was a frequently heard expression in Chinese villages as so many farmers rush to take advantage of government subsidies to snap up cars.

"The incentives were too good to pass up," another interviewer said, who borrowed more than 20,000 yuan from friends and relatives for a minivan.

Earlier this year Beijing published a 5-billion-yuan subsidy plan for 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.

Under that program, 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. This is based on an already 50% sales tax reduction and elimination of hundreds of dollars in road maintenance fees.

Now these efforts have yield to fruits. While new-vehicle purchases in the U.S. plunged 37% in the first four months of this year, they jumped more than 9% in China, to 3.8 million, with record volumes in March and April.

"We believe the worst is over for the industry, and that [first half results] could surprise on the upside," Citic Securities analysts wrote in a note to clients.