Top Biz News
Stimulus cash helps drive auto industry to success
By Li Fangfang (China Daily)
Updated: 2010-01-12 07:46
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The stimulus package successfully boosted automobile sales, especially minivans, which soared to 2 million units in 2009, an 80-percent year-on-year increase.
SAIC-GM-Wuling was the country's mini commercial vehicle sales champion, becoming the first Chinese automaker to sell 1 million units in a single calendar year. The firm's sales increased 63.9 percent year-on-year.
The stimulus package also helped Chinese homegrown brand BYD to boost sales by more than 150 percent to almost 440,000 units, making it the fastest growing automaker in China. The robust market has seen BYD raise its sales target for 2010 to 800,000 units.
After witnessing the fruitful results, the government last month said it will prolong the stimulus policies for one more year to further support the domestic automobile market. Officials went on to adjust the purchase tax for smaller cars from 5 percent to 7.5 percent of the total price, and tripled the ceiling for subsidies for trade-ins to 18,000 yuan per vehicle.
Miao Wei, vice-minister of Industry and Information Technology, was optimistic yet cautious on the outlook for 2010. China's auto industry will maintain sales growth but may slow to 15 percent, he predicted.
"The policy will contribute more to China's appeal for a high-fuel efficiency and low-emissions society as it encourages replacing outdated vehicles," said Yale Zhang, director of greater China vehicle forecasts for CSM Worldwide, a US auto industry consultancy.
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That deal was quickly followed by the announcement that Sichuan Tengzhong Heavy Industrial Machinery Co Ltd, a small, unknown company with no background in automobile manufacturing, was to take over luxury brand Hummer. The day before, Hummer's parent company, General Motors, filed for bankruptcy protection.
In December, Beijing Automotive Industry Holdings Co Ltd agreed a deal with GM to buy production equipment and intellectual property related to two Saab models - the 9-5 and 9-3 - including powertrain technology and tooling.
Geely was also the first to kick-off the nation's overseas acquisitions in 2010 by signing a primary agreement with Ford to buy its Volvo division last week.
Although Chinese automakers have been ambitious in purchasing global assets and brands, analysts warned companies must be cautious with merger and management after the acquisitions.
