Subsidies Driving Green Car Revolution

Anchor:

The number of cars being scrapped in China has shot up in the last two months following the government's implementation of its old-for-new auto subsidy plan.

Car owners involved in the plan can apply to get a subsidy of up to 6,000 yuan or about 900 US dollars, per vehicle from Monday; however some car owners complain that this figure isn't enough.

Our reporter Zhang Cheng has more.

Reporter:

In June and July, Beijing auto dismantling factories have been booming with an increasing number of car owners scraping their old or high emission cars.

Shi Zifu is the manager of one such factory in Beijing. He says the number of scraped cars in the factory has doubled over last two months.

"In June and July, over 1,100 units were dismantled and the increase is much faster than we expected."

There are 64 million vehicles in China, but over 18 million of these are "yellow standard cars," or vehicles that fail to meet the European No.1 standard for exhaust emissions.

Experts say China's old-for-new plan will accelerate the elimination of the "yellow standard cars" and boost the auto market in the future.

Liu Jianmin is the president of the China National Resources Recycling Association.

"The number of scraped cars in China has reached 2 million every year. After the launch of the old-for-new plan, the number will likely increase to 2.7 million units."

Though China is offering subsidies of between 3,000 yuan and 6,000 yuan per vehicle to encourage consumers to replace old models, many car owners think the subsidy is less than the value of their cars. As a result, many people have been choosing to sell their cars in the secondhand market.

Here is one of them.

"My car can be sold over 20,000 yuan in this market, if the car's condition was better, it could be sold for nearly 30,000 yuan."

After the calculation, she found that it is a better deal to sell cars in the second hand market, instead of dismantling them and getting the government's subsidy.

China's minister of commerce Chen Deming acknowledges that government subsidy is below market prices.

"The old-for-new subsidy plan is based on China's current fiscal power, so it is understandable the subsidy is less than the price of cars sold on the second hand market. But Car owners are free to choose to take advantage of the government's plan or sell their cars themselves."

Since May, the central government has allocated 5 billion Yuan for the plan.

Chen Deming adds the ministry will encourage local governments to allocate funds as well. It is hoped these combined subsidies will attract more car owners to get involve in the plan.

Zhangcheng, CRI News.