China's booming auto industry

The "Send Automobiles to the Countryside" campaign is working

China, like the rest of the world, has been hurt by the economic decline and the slowdown in manufacturing. But one area that’s escaped the downturn is its auto industry. In rural areas, the government has been offering big incentives to boost the sale of small cars and trucks—part of what it calls the “Send Automobiles to the Countryside” campaign. It offers a 50 per cent break on sales tax and a hefty 10 per cent rebate for those who buy cars with engines that are less than 1.3 litres. While the U.S. has seen car sales drop by nearly 40 per cent in the first four months of this year, China’s sales are up nine per cent. Some dealers can’t keep enough cars in stock (the biggest sellers are micro-minivans that go for about US$5,000). China’s rural residents have, traditionally, been big savers, but the car buying incentives may help break that habit. One economists says that half of the farmers in eastern China can now afford a car—that’s 200 million people. There’s some good news for Detroit in this, too. A lot of those cars being bought by Chinese farmers and migrant workers are made by GM.

Los Angeles Times

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