China Green Car Dream Meets Economic Reality

China’s campaign to bring cleaner, low-emission vehicles to its roads may take a back seat as the government seeks first to stimulate growth and counter dwindling sales in the world’s largest car market.

Battery and car maker BYD Ltd and other Chinese auto manufacturers with ambitions to be among the first globally to market all-electric vehicles are pinning their hopes on regulatory support to spur demand.
Car sales growth in China, which overtook the United States in January to become the world’s largest auto market, slowed to a single-digit rate in 2008 for the first time in at least 10 years as consumer confidence waned in a slowing economy, spurring government steps to bolster demand.

To lure buyers back into showrooms, Beijing in January unveiled a raft of policies including halving the auto purchase tax for cars with engine sizes below 1.6 litres. The government also scrapped some road fees and offered subsidies for farmers to boost demand for fuel-efficient vehicles in rural areas.

But given the high cost of developing hybrid and all-electric cars, automakers require more than the lifting of road fees and tax breaks to stimulate demand, experts said.

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