Year of Horsepower: Car industry shifts gears(2)

Subsidies for green vehicles continue

The Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the National Development and Reform Commission on Nov 22 jointly announced a new round of subsidies set for alternative-energy vehicles in 28 cities and regions by 2015.

The cities include Beijing, Shanghai, Tianjin, Chongqing, Guangzhou, Shenzhen, Dalian, Ningbo, Qingdao, Wuhu and major provincial capitals. Also on the list are city clusters in Hebei, Zhejiang, Fujian, Jiangxi and Guangdong provinces.

The big cities on the list must have at least 10,000 new-energy vehicles in operation by 2015, while smaller cities need at least 5,000 units.

Owners of pure electric passenger vehicles are eligible for subsidies of 35,000 yuan ($5,745) to 60,000 yuan. The subsidy for plug-in hybrids will be 35,000 yuan.

Subsidies for pure electric buses will range from 300,000 to 500,000 yuan, while those for hybrid buses will be 250,000 yuan.

Fuel-cell vehicles will be the biggest beneficiaries, with subsidies of 500,000 yuan each.

The ministries urged local governments to use new-energy automobiles as official vehicles and in public transportation. The central government is requiring local governments to have at least 30 percent new-energy vehicles in their official fleets and mass transit systems.

Local policy to curb autos on road

Tianjin announced an auction and lottery system to distribute a limited number of car licenses on Dec 15, making it the sixth Chinese city to use such measures to ease traffic and combat air pollution.

Municipalities Beijing and Shanghai are among the cities with similar restrictions. Others include Guiyang, Guizhou province, as well as Guangzhou, Guangdong province, and Shijiazhuang, Hebei province.

According to the Tianjin government, it will offer 100,000 license plates each year since 2014. Of them, 40,000 are available for auction and the rest are provided free of charge through the lottery system. There were 2.15 million vehicles in Tianjin as of April 2013.

A rule barring cars from the roads on certain days based on the last digit of their license plates will take effect in March in the city.

Tianjin and Shijiazhuang are two of the eight cities that the China Association of Automobile Manufacturers predicted in early July would soon introduce car restrictions.

Another six are -Shenzhen, Guangdong province; Hangzhou, Zhejiang province; Chongqing; Qingdao, Shandong province; Chengdu, Sichuan province, and Wuhan, Hubei province.

An online poll launched by news portal ifeng.com after the Tianjin government released its policy shows that 48 percent of more than 11,000 respondents believe Shenzhen will become the next city to limit the number of car purchases.

Reforms target use of government vehicles

The year 2013 saw two major reforms that affected the use of government and military fleets.

On Nov 25, a regulation against waste in Party and government offices was released, stipulating that only leaders at and above deputy-governor levels can be equipped with official vehicles. Also officials at the deputy governor level will not be granted public vehicles after retirement.

Industry insiders said this is the country's strictest regulation against the abuse of government vehicles.

They said this significant reform would help build cleaner governments as well as reduce public spending.

Independent auto analyst Jia Xinguang said the reform will not have a major impact on the passenger vehicle market.

He said annual purchases of government vehicles are expected to decrease by 300,000 units, but the cut only accounts for 2 percent of China's entire passenger vehicle market, which is projected to have annual sales of 16 million units.

Analysts are also predicting that a policy requiring the army to procure cars from domestically developed brands will be a boon for the national industry.

They said the practice may spread to more Party and government offices.

Such reforms are likely to influence some foreign automakers that mainly focus on China's government vehicle market, said analysts, adding that joint ventures will develop more local brands to adjust to the market change.

New warranty rules greeted all around

A new regulation on auto warranties effective since October 2013 has given Chinese customers unprecedented rights to return a faulty vehicle for a replacement or refund.

In January, the General Administration of Quality Supervision, Inspection and Quarantine issued the 3R regulation - repair, replacement or return - for warranty of newly sold vehicles. It has been implemented since Oct 1.

Not only customers but also dealers and carmakers have warmly welcomed the new rule.

However, analysts pointed out that there are still some challenges with regard to implementation, and authorities must continue to revise regulations while working to enforce them.

"Identifying who is responsible could be a complicated task," said Mei Songlin, vice-president and managing director of JD Power China, Shanghai.

Mei also said that dealers should take the initiative to inform customers about the details of the 3R regulation.

Gai Fang, deputy secretary-general of the China Automotive Maintenance and Repair Trade Association, noted that some carmakers may require customers to receive maintenance and repairs in designated dealerships using only approved parts in order to be covered by the warranty.