The Chinese auto industry is benefitting hugely from government attempts to target rural buyers with a range of incentives, according to a new Los Angeles Times report today (27th May).

Beijing launched its 'Send Automobiles to the Countryside' campaign earlier this year in order to support domestic sales and offset the decline in demand from foreign countries.

Among the initiatives are a 50 per cent sales tax reduction, the cancelling of road maintenance fees and a ten per cent discount for consumers buying cars with engines under 1.3 litres.

As a result, China has surpassed the US so far in 2009 in terms of sales, which increased by nine per cent to 3.8 million units in the first four months of the year.

This total - which also included record months in March and April - compares favourably to a decline of 37 per cent in the US during the equivalent period.

Jia Xinguang, an independent auto analyst in Beijing, told the news provider: "In the past, many automakers believed that the consumption ability in rural areas was quite low.

"[Now] everyone is asking, 'How can we sell cars in the rural lands?' "

The main vehicles being favoured by rural residents are the micro-minivans made by companies such as Wuling and Changan, with sales up by 40 per cent in the first four months of 2009 and 60 per cent in April alone.

Yang Dayong, Deputy Director of Sales at Changan, explained that his company is offering farmers a valuable service by attempting to flood the countryside with dealerships and creating more appropriate mini-vehicles.

He told the LA Times: "We're making cars with higher chassis, larger loads and more space inside to meet farmers' needs. It's something that brings them hope of a new life."

According to Zhu Xinkai, Agricultural Economics Specialist at Renmin University of China, 200 million farmers in the eastern half of the country can afford to buy a car.

Source:

In rural China, a bumper crop of new car owners (27/05/09)

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