The Chinese government will revive financial incentives to entice consumers to trade in their passenger cars to help boost the demand in the country, a government official has confirmed. Last week, the cabinet approved the plan and currently, the involved ministries are determining the details like the types of vehicles covered and amount of state funding.
This official, who asked to be anonymous, said that the government is also undergoing feasibility studies with regards to the funding of new car purchases in rural areas. Government officials are facing rising pressure to revive consumer demand after the economy had become slower than predicted and sales declined.
In 2009, China launched a cash-for-clunkers program in response to the worldwide financial crisis, according to Autonews. The following year, the company reported 49.6 billion yuan ($7.8 billion) in new car sales. The shares of Chinese carmakers widened due to rising speculation that the government is readying to boost economic growth. SAIC Motor Corp. grew by 5.2%, the highest in four months, to 15.54 yuan in Shanghai.
Geely Automobile Holdings Ltd., Great Wall Motor Co. and Dongfeng Motor Group Co. all reported increases of over 8% in Hong Kong. The China Association of Automobile Manufacturers said that Chinese total vehicle sales decreased by 1.3% in the January-to-April period. This is its worst figure since 1998 when deliveries declined by 1.6%.