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Automotive Revitalization Program to be China’s new industry policy

Specific measures of China’s Automotive Industry Revitalization Program are being circulated within China’s automotive circles and expected to be released soon to the public, according to an insider who has been involved in drafting the Program.

Earlier on January 20, the State Council, China’s cabinet, announced the adoption of the Revitalization Program which has five major points: to reduce by half the sales tax of vehicles with engine displacement of 1.6L or less and to lend policy support to industry consolidation, independent innovation, new energy vehicles and independent vehicle brands.

According to the insider, the specific measures, which are to be implemented by key government ministries, are no longer merely policy statements. They will include concrete fiscal, financial and tax measures that will help boost new energy vehicles, independent brands and industry consolidation.

A breakthrough decision by the central government, according to the insider, is the adoption of a national strategy in support of the development of new energy vehicles, which is discussed in detail of the Revitalization Program‘s Four Guiding Principles, Eight Development Goals, Eight Major Tasks and 12 Key Measures.

The government is to set a goal for the industry to produce 500,000 units of pure electric, PHEV and hybrid vehicles in three years, or 5 percent of the market shares. Each of the country’s passenger vehicle makers will be required to have a licensed new energy vehicle on the market. The development focus will be on pure electric and plug-in vehicles, key power modules, drive assemblies and optimal designs. Total battery power capacity to be realized will be 1 billion amp/hr, or the equivalent of 1 million units of battery powered automobiles in operation.

Financial subsidies and tax breaks will be offered to new energy vehicles. All governments, from the county level and up, will be encouraged to use new energy vehicles. In the next three years, the government will invest ¥10 billion ($1.47 billion) in support of new energy vehicle development, technology upgrade and dedicated parts and components. Financial subsidies and tax breaks are to be offered first to new energy vehicles for institutional and fleet use. Subsidies and tax breaks for individual consumers of new energy vehicles will be offered later this year.

In an effort to support local vehicle brands, the government will revise the current standards on engine displacement and vehicle price for government and institutional purchase so as to “prioritize the purchase of new energy and independent branded vehicles.” According to a new requirement, 50 percent of government owned automobiles will have to be independent brands.

With regard to the definition of independent brand, for the first time the Revitalization Program specifies that the trade mark of an independent-branded vehicle must be “registered in China” in accordance to global standards.

In all practical terms, the Revitalization Program will serve as China’s 3rd automotive industry policy after the second one published in 2004.



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