China surpassed the U.S. to be the world’s largest auto market in 2009, the same year the quasi-communist-not-quite-capitalist nation also enacted its first attempt at a Cash for Clunkers-style government funded scheme to boost new car sales.
Now, two years later the world’s top market is looking to further solidify its position as top dog with yet another scrapping scheme that will push new car sales, according to The Detroit Free Press. The newest plan will hand out up to $2,800 (11,000 to 18,000 yuan) to takers that trade-in buses, trucks and other “old farm vehicles” towards the purchase of a newer, more fuel-efficient model.
According to the Chinese finance and commerce ministries, the program is intended to “facilitate travel of urban and rural residents and to promote improved quality of transport, in line with public interests.”
But will it work?
Despite the fact that the latest clunkers program offers more cash than before, critics in China are suggesting it will likely still have little impact. Why? Because the used car market in China is so strong owners of used vehicles can likely fetch a higher net return selling vehicles than trading them in.
“Car owners can make even more money in the second hand market. So unless they can’t sell the vehicles there, I doubt it will do much to boost sales,” said Rao Da, secretary-general of the China Passenger Car Association.
References
1.’China to try…’ view
