China’s Subsidy for Energy Conservative Models Came to an End, the Sales of Small Models Decreased

China’s domestic auto market came in to a relatively regular period of slack sales after China’s Spring Festival Holiday. But this year, the market of small models is even more depressing due to the end of China’s 3,000 yuan subsidy for energy conservative models. According to our observation, some consumers decide to wait and see for some time while many dealers are concerned about the sales of small models without the subsidy.

Industrial experts believe it’s uncertain that whether there will be a new subsidy for energy conservative models, but for now, the end of this 3,000 yuan subsidy will definitely stop some consumers from purchasing a 100,000 yuan vehicle.

According to a sales staff at a Changan Ford dealer, since the end of the subsidy, some of the consumers have postponed their purchase plans while some others with sufficient budget decided to go for bigger models.

On the other hand, the small models are essentially low profit products, so there is no way for the dealers to pay the difference of 3000 yuan.It’s observed that some JV brands including GAC Toyota and Changan Ford haven’t offered additional subsidy for small models while some Chinese domestic brands have responded actively. Geely and BYD will provide a 3000 yuan subsidy themselves to the consumers who buy small models under the scope of the original subsidy.

Yan Jinghui, an auto expert, believes China’s subsidy for energy conservative models is not only an encouragement for the manufacturers to apply more energy efficiency technologies, but also a sales point for the dealers. It’s believed that China is likely to issue a new subsidy for energy conservative models, and even not, the 50% reduction of vehicle purchase tax for small models will still attract consumers in a long term.