China's policy stimulus to spur car sales in year of ox

Special Report:Global Financial Crisis

SHANGHAI, Jan. 28 (Chinese media) -- Due to bigger-than

expected cut in fuel prices at the end of 2008 and halved car purchase taxes in

effect just before the Lunar New Year, China's auto industry can expect the

policy stimulus to make the year of the ox a bullish one for sales growth, which

was in a ten-year low in 2008.

"With the recent policy changes on fuel price, car

purchase tax and fees, I can save more than 8,000 yuan (1,170 U.S. dollars) to

have a car," said Wang Yong, who just bought a new POLO sedan produced by

Shanghai Volkswagen Co. Ltd.

Like many other auto makers, the company offered

discounts of 5,000 yuan for POLO and LAVIDA models during China's Lunar New Year

to woo the young working class. The prices for the cars are a little higher than

100,000 yuan, which is generally considered affordable for wage earners in

China.

More than 3.1 million small-sized cars were sold in

China last year, accounting for 61.54 percent of the total 9.35 million units of

vehicles sold in the period, when the year-on-year growth slowed to 6.7 percent,

the lowest in ten years, according to statistics with the China Auto Industry

Association.

Ye Sheng, an auto industry analyst said that China's

auto market is far from saturated -- especially for private vehicles.

He expected the government's stimulus would boost the

market sentiment this year.

Ye said that the global financial pinch shrank the

demand for business cars, and drove up the cost for auto production. However,

China's auto demand continues to growth with the increase of personal wealth.