Chinese government to reward scrapping your car and buying a new one
by Jonathon Ramsey on Dec 28th 2008 at 3:31PM 
China, just like the U.S. of A., is worried about its auto industry. Last year Chinese auto production topped 8.8 million vehicles, and this year the country was on track to reach 10 million sales. Then everything went all pear-shaped, and now Chinese automakers are asking their government for help. Beijing hasn't said exactly what it will do yet, but one plan is to offer incentives for folks to scrap the cars they own and go buy new ones.The key word in this plan is "scrap." The way it's been presented, the government doesn't want folks to just trade in their cars - that would simply add more cars with much smaller margins to dealer lots. They want car owners to send their cars to the crusher. If that's what is actually being considered, we'd be interested to find out how close the "incentive" will be to the value of the car being junked. If the difference is considerable, that plan sounds like a non-starter.
Thankfully, other tacks are being considered: lowering the vehicle purchase tax, making auto loans easier to get, and relaxing the quotas on how many loans banks can make. China's auto sales haven't yet slid into the crevasse -- November sales were down 14.6% -- but with many other sectors of the economy weak, the government is trying to get ahead of a fall before it actually happens.
[Source: Drive.com.au]
Reader Comments (Page 1 of 1)
Travis 3:46PM (12/28/2008)
After seeing first-hand the clap-tastic "vehicles" that exist on China's roads, I think this is an excellent, excellent idea. One of my favorites is the DR-Tractor-Mower front, hooked up to a 2-wheel cart so that it makes some type of rideable/drivable vehicle, it's unfiltered diesel exhaust spewing who knows what into the air.
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Owen 10:26PM (12/28/2008)
Actually, I think this is a great idea. Did anyone take the time to divide out the dollar figure that is being given to the auto manufacturers and spread that around to the decrease in percentage of cars that have been sold in the last year. Basically, you would have enough money to give every driver in america a new car over the next 4 years and the sales for all of the auto manufacturers would be back up to peak levels 2 years ago. The only downside I see to my plan is a glut of cars because we were likely selling cars too fast for the realistic demand. This fixes that problem, and again, if the incentive is worth it, it's geneous, and I'm glad someone had the sense to do it.
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Jei 10:45PM (12/28/2008)
I kinda like the basic idea of scrapping old cars if provided "heavy/generous" incentives to purchase a new one. It could be offered to dealerships also so they could get rid of the crap on most of their lots.
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penguendedektif 3:09AM (12/29/2008)
It's actually not a new idea. About four years ago it was done in Turkey. Government slashed about $3000 of tax off new cars for every scrapped car. It was so successful that dealers were finding the scrappable cars themselves just to make sales. Car industry in Turkey nowadays is pressuring the government to bring it once more but probably with higher tax cuts...
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Richard S. 2:58PM (12/29/2008)
This makes sense if you are scrapping 15 year old cars which are not safe, high polluting and not gas efficient. Give the credit towards purchase of new fuel efficient cars and at least the reduction in oil imports will offset the initial cost.
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