Automotive Industry: New Car Policy Increases Subsidy for Commercial Vehicles

Incident: The State Council requires that household appliances, automobiles, and motorcycles go to the countryside to work better and continue to implement the trade-in policy for home appliances and cars.

On the 9th, Premier Wen Jiabao presided over the executive meeting of the State Council and proposed six major tasks for the economy next year. Among them, there are the following three concerning automobiles: (1) The implementation of the automobile-to-country policy extension until the end of next year has been incorporated into the subsidy channels for motor vehicles. Car-to-township policy was implemented until January 31, 2013; (b) Continue to implement energy-saving products to benefit the people project, increase the promotion of high-efficiency lighting products, and expand the pilot cities for the demonstration and promotion of energy-saving and new energy vehicles from 13 to 20. Five cities were chosen to provide subsidies for the private purchase of energy-saving and new energy vehicles. (3) The policy to reduce the purchase tax for vehicles with small displacements of 1.6 liters or less will be extended to the end of 2010, with a reduction of 7.5%. The standard for subsidy for bicycle replacement for cars was raised from 5,000 yuan to 18,000 yuan.

Compared with previous policies, the new policy has increased the subsidies for commercial vehicles . The subsidy to the countryside still shows that the country still attaches great importance to the rural consumer market; the preferential policy for small-displacement vehicles is adjusted from the reduction of 5% to the reduction of 7.5%, indicating that the consumption of cars in the country will be driven by record sales of cars. The intensity of support has weakened; the trade-in replacement standard has been adjusted from no more than 6,000 yuan to 5,000 yuan - 18,000 yuan, indicating that the country has strengthened its support for commercial vehicles, particularly large-scale commercial vehicles.

From our current expectations for the growth rate of various automotive sub-sectors in 2009, the rapid growth of the passenger vehicle industry in 2009, and the growth rate of the commercial vehicle industry represented by heavy trucks and buses is obviously low. We believe that the introduction of the new policy It is to enhance people’s desire to purchase commercial vehicles and to benefit the commercial vehicle industry.