China’s Yiwu offers subsidy of up to RMB20,000 per car to shore up auto sales

Yiwu, recognized as the world's largest small commodities market, has launched incentives to lift automobile sales in order to offset the COVID-19's impact on local auto market.The more expensive a vehicle is worth, the more cash a buy will receive. Consumers who buy vehicles priced below RMB10,000 (including VAT) will be afforded with a subsidy of RMB3,000 per car. A Subsidy equivalent to RMB5,000 applies to a car priced at RMB10,000 or between RMB10,000 and 300,000. Furthermore, the unit incentive will be doubled to RMB10,000 for the products whose prices sit at RMB300,000 or between RMB300,000 and 500,000, and to RMB20,000 for those priced at or above RMB500,000.

The government will release a white list of local automobile sales companies. The validity period for the policy will last from the issuance of the white list to June 30, 2020.

Individual consumers or companies who purchase new vehicles from the sellers on the abovementioned white list and pay automobile purchase tax in Yiwu can score the subsidies after their applications are approved by relevant authorities.

Apart from the expiry data, the government also sets a limit over the number of vehicles applicable to the enticement. A quota of 10,000 units will be launched initially thereby to prompt consumers to buy cars as soon as possible.

China auto sales edged up 4.4% year on year to 2.07 million units in April, but the PV sales still dwindled 2.6%, according to the China Association of Automobile Manufacturers (CAAM). It may portend that the demands of private automobile consumption need to be further unleashed and boosted.

To revive the auto sales hit hard by the coronavirus spread, a number of cities in China have rolled out various measures, among which offering subsidies is the most adopted one. Yiwu is not the first one, and will certainly not be the final one.