China's automakers get a turbo boost

Chery Automobile, BYD Auto and other Chinese car brands, whose sales are already booming in the world’s biggest auto market, are set to get a further boost from changes to rules on Chinese central government purchases of vehicles.

New guidelines that will lower the maximum engine size and prices permitted for government vehicles are expected to lead to a move away from high-end cars made by foreign joint ventures and towards vehicles at the top end of ranges produced by Chinese companies.
The National People’s Congress standing committee meeting said last month that domestic brand cars should account for not less

than 50% of official vehicles purchased by “all levels of government and public institutions”. That is line with a similar declaration last June by the procurement center for the central government, which also released a list of approved carmakers that included 21 domestic brands on its list of 38.

The new measure will favor smaller and cheaper domestic brand cars, especially those for general officials. The maximum engine displacement for their purchases is likely to be reduced to 1.8 liters from 2 liters and the price limit lowered to 160,000 yuan (US$23,400) from 250,000 yuan, according to a report by China Business News.

The change of policy, whose implementation is being studied by the Ministry of Finance, the Government Offices Administration of the State Council and the Communist Party’s Central Commission for Discipline Inspection, will give a further boost to sales of domestic car brands in China, where overall sales surged about 50% last year. That made it the world’s biggest auto market. Customers bought about 13 million vehicles, compared with just over 10 million in the US.

Asia Times