Parliament members call for more favorable policies for small vehicles

By: Linda Luo   2010-03-14

During this year's parliament session, several members who are senior automotive executives submitted motions for the State Council to consider adopting more favorable policies in support for manufacturing and use of micro and small vehicles.

According to statistics released by the China Passenger Car Association, sales of passenger vehicles (including microvans) with engines of 1.6L and below accounted for about 70 percent of total passenger vehicles in 2009, up 7.5 percent year-on-year, thanks to a reduced sales tax by 50 percent.

However, the market share of passenger cars with 1.0L and smaller engines dropped from 13.5 percent in January 2009 to 9.8 percent in December. Consumers obviously opted for larger size engines with the same tax break.  

The same is true with microvans and micro trucks, which were sold to rural residents with subsidies. Sales of microvans, which are ideal family vehicles for the vast number of rural population, skyrocketed in 2009 to almost double those in 2008. But most rural consumers also opted for microvans with 1.3L engines instead of 1.0L or smaller.

Members of parliament therefore voiced their concern that the government's goal in promoting smaller vehicles set in the Automotive Industry Readjustment and Revitalization Plan may not be realized. According to the Revitalization Plan, China wants to increase the market share of passenger vehicles with 1.0L and smaller engines to 15 percent and vehicles with 1.5L and below to 40 percent by 2011. The current market trend obviously is a departure from the anticipated goals, especially for 1.0L and smaller passenger vehicles.

Shrinking market shares of micro and small vehicles goes counter to the country's efforts in building a low-carbon economy and pursuing sustainable development of China's auto industry, argue parliament members. As chief executives of independent vehicle brands that mainly produce small and micro vehicles, they would want more support from the government for a bigger market share for their products.

In the interest of energy saving, environmental protection and independent innovation and branding, China is expected to adopt more policy measures and tax incentives in support of small and micro vehicles in the coming years.