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.


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