– by Feng Jugao
Rough and bumpy road for low-speed vehicles
The low-speed vehicle (LSV) used to be called the farm vehicle.
The farm vehicle has seen better days. Thanks to its low price and durability, it was once the first choice by farmers in China’s vast rural areas as a means of transportation. A booming farm vehicle market has given rise to a host of manufacturers, the best known being Shifeng and Wuzheng.
The watershed for the farm vehicle’s fortune appeared in 2004. With the new Road Traffic Safety Law going into force on May 1 of that year, the farm vehicle was put under the administration of public security bureau, away from the agricultural machinery department, classified as an LSV or “three-wheeler” and began carrying a motor vehicle license plate.
Before adoption of the new policy, owners of farm vehicles, which were treated as farm machinery, paid no fees. Now that the farm vehicle becomes an LSV, its owner has to pay a host of motor vehicle related fees, including the vehicle purchase tax and the road maintenance fee. Maximum payment for a new LSV comes close to ¥3,000 ($441). For a peasant, this is a lot of money. As a result, sales of farm vehicles plummeted.
In recent years, mini-vehicles have won over a growing number of low-income peasants, worsening difficulties for farm vehicle manufacturers.
Policies once again impacted the farm vehicle industry in 2008. Beginning from July 1 of the year, the State III emission standards (equivalent to Euro III) became applicable to all motor vehicles, including the farm vehicles, or LSVs. This means that a ¥20,000 farm vehicle now sells for ¥30,000 as a State III engine is around ¥10,000 more expensive than a State II engine. This further worsened the farm vehicle’s predicament. Price hikes caused sales to fall further.
In 2008 the national output of LSVs and three-wheelers was 2 million units, down 6.32 percent from the previous year, according to statistics provided by the Farm Vehicle Chapter of China Farm Machinery Industry Association. With implementation of the “Autos for the Countryside” subsidy program, light trucks have begun to compete against LSVs on a market that used to be the latter’s preserve. LSVs have faced greater challenges on the market in 2009.
Subsidy policy does not benefit LSVs
This year has seen a booming auto market in China. Policies have undoubtedly boosted sales. One of the policies is “Autos for the Countryside” subsidy program.
Unfortunately, the subsidy program does not cover LSVs. “This policy does not seem to reflect peasants’ wishes,” says Zhang Xiansheng, secretary-general of the Farm Vehicle Chapter.
The Plan for the Implementation of Autos and Motorcycles for the Countryside Subsidy Program made public on July 14, 2009 once again delimits the scope for subsidies. The Plan provides for subsidies for used micro trucks, light buses, medium and light trucks that are to be sold during June 1, 2009 – May 31, 2010. Low-speed trucks and three-wheelers are not included. The subsidy policy has gone through several revisions but, so far, no revision has given any benefit to the LSV.
LSV continues to have vitality
With the adoption of “Autos for the Countryside” policies that clearly disadvantage LSVs, industry circles feel worried about the prospect of the LSV industry. But a market rebound in the first half of 2009 proves once again the vitality of the LSV.
In the first half of 2009, sales of LSVs and three-wheelers reached 1.14 million units, up 5.87 percent over the same previous period. Of the total, low-speed four-wheel trucks were 268,000 units, up 11.82 percent; and three-wheelers 874,000 units, up 4.17 percent.
“Reality shows that rural areas have a big demand for LSVs,” Zhang Xiansheng says.
Economic development is uneven in the Chinese countryside. In 2007, annual per-capita net income for peasants was ¥5,855 in east China, ¥3,844 in central China and ¥3,028 in west China. Rural areas also have vastly different geographical and road conditions. Roads in many areas, which are good only for low-speed trucks, are barely passable for micro trucks and light trucks.
Therefore, peasants in different areas prefer different kinds of vehicles.
“Statistics show that, of all vehicles bought by peasants, motorcycles account for 28.2 percent, three-wheelers 22 percent and four-wheel LSVs 12.8 percent, their combined proportion exceeding 60 percent. The combined proportion of micro trucks, light trucks and microvans comes to about 4 percent only,” Zhang Xiansheng says.
Zhang calls for the subsidy program to cover the LSV formerly known as the farm vehicle. “This will help boost domestic demand,” he says.
Rewritten by Raymond Chen based on
author’s story carried by www.ce.cn