A new round of car to the countryside policy to start, micro cargo, pickup benefit


Dec 13,2015



According to Bloomberg 9, people familiar with the matter said China plans to launch a new round of auto rural policy to include passenger cars under 1.6 liters, micro passenger and cargo, pickup trucks and other light trucks in the product range. China also plans to increase the construction of parking lots and new energy vehicle charging infrastructure.



Analysts believe that the second and third-tier cities and rural areas have low car ownership and greater rigid demand, which is expected to become the main force of future growth in the auto market. In the context of the current macroeconomic slowdown, auto consumption is expected to play an important role in boosting domestic demand growth, and the "car to the countryside" policy is one of the better economic stimulus policy options.

In order to stimulate the economy, the State Council issued in September this year a 50% reduction in vehicle purchase tax, providing that from October 1, 2015 to December 31, 2016, the purchase of 1.6 liters and below displacement passenger vehicles, the implementation of a 50% reduction in vehicle purchase tax preferential policy.

In 2009, in order to stimulate the economy, the country introduced 4 trillion stimulus policy, purchase tax exemption is part of it, but also supplemented by a series of policies such as car to the countryside, car tax exemption, which is very obvious for the stimulation of China's entire car market.

Previously, the "car to the countryside" policy was mainly based on one-time financial subsidies for specified models, as well as subsidies for early scrapping of old cars and purchase of new cars. The main subsidized cars have the following characteristics: small-displacement passenger cars, micro-buses, domestic brands are mainly very few joint venture brands.

"The intention to buy cars from microbus to domestic small SUV and MPV, and these SUV and MPV may also become the focus of the new subsidy policy support," Macquarie Group analyst Janet Lewis in Hong Kong told Bloomberg. "This time, domestic manufacturers may benefit more than international brands."

Shares of companies in the auto and lithium sectors as a whole rose on Wednesday, outperforming the broader market significantly.