Chinese lawmakers appeal to government to offer incentives for small cars

Shanghai. March 14 (Gasgoo.com) – Delegates to the annual session of National People's Congress are appealing to the government to offer incentives to both manufacturers and consumers of small displacement cars, state media China Youth Daily reported yesterday.

 

The delegates asked Chinese government to lower or cancel taxes and other charges for both manufacturers and consumers of small displacement cars in road maintenance fee, toll, parking, insurance and etc, the report said.

 

While surging oil prices and worsening air pollution are becoming more and more serious concerns for both Chinese government and industrial experts, the sales of small displacement are declining continuously.

 

Last year, China sold a total of 730,200 small cars with engine displacement below 1.3 liter, which represents only 11.6 percent of China's total sedan sales, according to China Association of Automobile Manufacturers. While China's sedan sales rose 21.84 percent, the sales of small displacement cars dropped 3.7 percent. Also last year China sold only a quarter million small cars with engine displacement below 1.0 liter, down 30.9 percent.

 

Official statistics from National Passenger Vehicle Manufacturers indicate that average engine displacement of China-made sedans last year stands at 1.68 liter, an increase of 0.15 liter from one year earlier.

 

More importantly, the government has not so far offered any substantial favorable policies toward the use of displacement cars. For example, the government imposes same property tax on a 1.1 liter displacement QQ (about $5,000) and a luxury Bentley ($1.5 million).

 

Separately, a recent survey conducted by Sinotrust found that more than 80% of Chinese car buyers choose to buy vehicles with engine displacement between 1.3L and 2.0L; only less than 20 percent opt for vehicles with displacement of 1.3L or smaller.

 

Sinotrust, a supplier of marketing solutions and credit solutions in China, surveyed 15,000 car consumers on small displacement vehicles.

 

"The small displacement vehicles are usually poor in driving experience, comfort, and safety compared to larger vehicles. I would rather spend a little more money on a larger vehicle, such as Polo, Fit or Peugeot 206," a car owner said.

 

 Traditionally, small displacement cars are perceived by Chinese consumers as low priced, poor quality vehicles that deliver poor driving experience, low safety standard and poses serious pollutions. More Chinese cities and local governments have restrictive polices against small displacement vehicles.

 

Most small-displacement cars, including Chery QQ, FAW Xiali and Changan Benben, cannot meet Euro III emission standard yet and are banned in major cities like Beijing and Shanghai.

 

Industry experts identified two reasons behind the continuous decline of the sales of small cars. First most Chinese consumers consider "face-losing or embarrassing" to drive small cars and therefore have an inclination not to buy small cars; secondly, the repeated price-cuts of middle and high-end cars are squeezing the market share of small cars.

 

Now industry experts are talking about one more important factor that government has done nothing to show its support to small displacement cars: not preferential polices or incentives are offered to small displacement cars.

 

To address this problem, Wang Feng Ying, president of Great Wall, suggests that the future belongs to high quality, high safety performance, fuel saving and less polluting small vehicles and they should have all the incentives from the government.