China to offer higher subsidy for car trade-in

(chinatrucks.com, Dec.14, 2009)The Chinese government will offer higher subsidies to car owners who trade in their old vehicles for new clean models,CCTV.com reported last saturday. This move is expected to boost sales of new cars while helping protect the environment and achieve energy efficiency.

Since August this year, China has been accepting old cars in exchange for subsidies on new car purchases. Initially, the trade-in subsidy for each clean model was 6,000 yuan ($880) at most. Now, the subsidy has been raised to a maximum of 18,000 yuan.

"The new subsidy will bring more benefits to car owners. For cars 10 years and older, they would attract a higher subsidy than their sale price on the used auto market. Car owners will be urged to benefit from the scheme," said Wang Meng, an analyst of Beijing's used auto market.

For example, a used Peugeot would likely get about 10,000 yuan on the second-hand car market. But if the owner trades it in and buys a new car, the subsidy will be 15,000 yuan. In a highly price-sensitive auto market, car owners are likely to choose the subsidy.

This new subsidy policy will speed up trade-ins of old cars and help China reach its target for cutting emissions, said an executive of China Auto Dealers Association. At the same time, car owners will buy new cars and boost the auto market, he added.

The government's subsidy will be at least equivalent to the price of a 10 to 15-year-old car on the second hand market. In smaller cities, the subsidy may be even higher, the industry expert said.

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