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Rural car policy may be introduced to tackle market downturn

Source: China Securities Journal | Date: Dec. 10

  • Sources say that a new rural automobile promotional policy may be soon implemented. Carmakers like Changan have tried to seek confirmation of this policy from relevant government departments but have yet to receive any reply.

  • Analysts pointed out that amid the downturn of the Chinese car market, which is characterized by high dealership inventories and low capacity usage, the rural automobile promotional policy is considered a secondary measure to drive the growth of the car market following the 50% purchase tax cut policy.

  • Past experience has proved the effectiveness of the 50% purchase tax cut and rural automobile promotional policies. Following the implementation of the tax cut policy in Oct., the car market has fully rebounded.

  • Moreover, the implementation of the rural automobile promotional policy may benefit domestic carmakers like Changan and SAIC.