Farmers to get subsidy for auto purchases

The central government has detailed¹ a stimulus² plan encouraging farmers to buy automobiles⁵, which may bring a surge in auto³ sales in rural areas, experts said yesterday.

After the central government announced in January that it would provide 5 billion yuan ($732 million) to subsidize rural residents' automobile⁴ purchases, the Ministry⁶ of Finance announced over the weekend the subsidies⁷ for automobile and motorcycle purchases would be 10 and 13 percent.

Farmers who buy light trucks and minivans from March 1 to December 31 this year will get a 10 percent discount, with a subsidy⁸ ceiling of 5,000 yuan.

Subsidies of 2,000 and 3,000 yuan respectively can be used to replace old three-wheeled and four-wheeled vehicles.

From February 1, 2009, until January 31, 2013, farmers who buy motorcycles would receive a 13 percent refund⁹, with a subsidy ceiling of 650 yuan.

Every rural household is limited to purchasing two motorcycles, and farmers are not allowed to resell their vehicles for two years, according to the scheme. Farmers who have bought the vehicles can apply for the subsidies with their receipts and certificates for the vehicles' operation.

Yang Dayong, deputy director of the sales department of Chongqing-based Chana Auto Co Ltd (ChangAn), said the new subsidy policy would likely spur a surge in minivan sales.

ChangAn and SGMW are the two largest minivan makers¹⁰, accounting¹¹ for 21 percent and 51 percent of China's minivan market.

Because of the auto stimulus plan, ChangAn had sold 11.3 percent more units in the first two months of 2009 over the same period last year. Yang predicted ChangAn's minivan sales in 2009 would increase 25 percent year-on-year.

Questions:

1. What is the subsidy ceiling for farmers who buy light trucks and minivans?

2. How many motorcycles can every rural household purchase?

3. What are the two largest minivan makers in China?

Answers:

1. 5,000 yuan.

2. Two.

3. ChangAn and SGMW.