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Industry News

The ¡°Exchange the old one to the new one¡± policy for cars contiues for the end of the year, and may double the pulling effect

Source: Shanghai Securities News Author£ºadmin Hits£º9535 Time£º2010/7/16 9:00:05
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     China automobile "Exchange the old one to the new one" policy has recently announced to be continued to the end of the year. Industry associations say the policy renewal; the implementation of the results is expected to increase: new car consumption is expected to reach at least 30 billion Yuan at the end of this year, that is double of the 15 billion Yuan of the end of May.

Ministry of Commerce website on June 13 announced, after the approval by the State Council, automotive "Exchange the old one to the new one" policy will be extended from May 31, 2010 to December 31, 2010. Recently, the Ministry of Finance, the Ministry of Commerce, the Environmental Protection Department will jointly issue a notice to extend the policy and make specific arrangements. This is a 7 months continuation based on the previous one year policy.
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"Exchange the old one to the new one" policy is getting better
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"To the end of this year, I predict pull effect of the "Exchange the old one to the new one" policy will increase, more than 200,000 vehicles will benefit from this policy, the new car consumption by the end of year will be doubled of 15 billion from the end of May. " said by Luo Lei, Vice deputy secretary of China Automobile Dealers Association, to Shanghai Securities News.
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The reason of his prediction is simple: “The fund for "Exchange the old one to the new one" policy is 5 billion, but by the end of May, the amount of subsidy has been spent 1.7 billion, leaving 3.3 billion not being used, From this ratio is the end of this year 7 months, the effect of the policy will at least double.”
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He believes that for now, “The fund for "Exchange the old one to the new one" policy implementation has been getting better. Since January 1 this year, the government has adjusted the degree of this policy, and the policy is gradually more popular among people, by the end of this year, the effect will be more pronounced.
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Commerce Department official said, the implementation of the policy is not only promotes the consumption of automobiles, more importantly, accelerated the phase-out process of high-emission, high pollution car and other old cars. By May 31, 2010, applications handled of this policy has been up to 127,000 vehicles; allowance has been 1.7 billion, pulling up new car consumption of 15 billion Yuan.

In addition to cars, the pull effect on coaches and light trucks are quite obvious too. According to China National Resources Recycling Association, among all vehicles, cars, buses and small and medium-sized trucks accounted for 36%, 30% and 19%. Jiangsu, Zhejiang, Shandong, Henan, Anhui, Hebei, Sichuan, Jiangxi, Liaoning, Hunan, are the top 10 provinces, taking the share of more than 72% of the total.
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The continuation of this policy is also the general need of the markets. The previous policy implementation time is from June 1st, 2009 to May 31th, 2010. But market insiders point out that: “Since the implementation of every policy has a adjust time, and there are many supporting measurements for this policy, so the actual operation of this policy has extended for about 3 months invisibly. Meanwhile, the previous allowance standard is low, the effect of the implementation is not obvious, and the normal function of this policy starts at the year of 2010, after the adjustment of the allowance. Thus, the actual effective operation time is about 5 months; therefore the extension of this policy is necessary.” By multi forces, especially during the period of time that near the end of this policy, the market grows significantly. In order to continue pull up car consumption, during the decision time of whether to continue this policy, Shanghai and Guangzhou have declared to continue this policy in the form of allowance by local governments.
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According to Shanghai Municipal Commission of Commerce, approved by the city government, Shanghai will extend the implementation date of “Measurement of Shanghai encourages the old car to update allowance” to December 31st, 2010, meanwhile the receiving date is extended to January 31st, 2011.
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Application procedures still need to simplify
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In fact, there are many difficulties during the implementation of "Exchange the old one to the new one" policy. The Ministry of Commerce, Ministry of Finance launched the car update policy in June 2009, the one who retire old vehicles early and buy new car can have the allowance of 3,000 -6,000 Yuan. But the results is not obvious, and the policy has been described as "tasteless". In December 31st, 2009, the standard had been adjusted up to a maximum of 18,000 Yuan, the one who has been receiving allowances under the old standard, can acquire the difference between replacement under the new standards.  After the publication of the new policy, the enthusiasm is becoming apparent.

Gao Yanli, the Secretary-General of China National Resources Recycling Association, told reporters, "Exchange the old one to the new one" concept is pretty good for energy conservation, stimulating domestic demand, environmental protection, recycling of resources, promote economic growth and promote the development of the automotive industry.
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She also points out that laws, regulations, matching system for vehicles mandatory retirement is not perfect, laws and regulations for vehicles mandatory retirement should be published as soon as possible, to avoid vehicles to increase the harm to the environment. Strengthen the management tools are also needed to prevent the scrapped vehicles transferred from the city to the countryside. However, according to some insiders, exchange policy reforms still need to do something to get better results.
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Cui Dongshu, Deputy Secretary-General of National Alliance for Vehicles points out two major recommendations for the exchange policy:
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First, encourage manufacturers, distributors involved in this policy, and simplify the application process.
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The current problem is the complex procedures and fewer networks. The dealers can be the window of the policy, let the professionals do the tough work, so the consumers can release the burden. This will greatly promote the effect of this policy, and can make the car manufacturers have the opportunity to make contribution to the exchange policy, while the consumers can do this more quickly and easily and affordable.
 
Second, increase the allowanc of the exchange policy. Significantly increase the price of used cars, and encourage enterprises to participate this policy.

(Shanghai Securities News)