Beijing's municipal goverment is set to introduce a vehicle scrappage scheme likely to reduce pollution and boost China's vehicle market.
Scrapped cars Image: Joost J. Bakker IJmuiden |
The scheme, likely to be introduced in the second half of 2011, will offer financial incentives to owners of vehicles which meet only the old State I emission standards. While the scheme is intended to help reduce emissions and pollution in the City and surrounding region, the announcement is likely to provide a welcome boost to China's auto industry.
Scrappage benefits will be offered to vehicle owners of as many as 400,000 vehicles - 50% of which have downgraded from State II to State I status due to length of time on the road.
Beijing's authorities are likely to be encouraged by the success of other schemes around the world, in particular Europe. In Germany a €5bn ($7bn) initiative removed some two million old vehicles from the road and lifted new car sales by 28% in one month, year-on-year, while a scrappage initiative in the UK, which ran from May 2009 to March 2010, not only scrapped some 400,000 old and polluting vehicle but also accounted for 20% of total new vehicles sales at a time when the auto industry was suffering the worst of the recession.
Despite some current gloom around China's domestic auto industry, automotive analyst JD Power is bullish about the overall growth of the market, predicting that manufacturers will sell 40% more cars in the China than in the US this year at around 13 million vehicles. Their long-term prediction, based on continued growth of the Chinese economy, shows annual sales of close to 40 million vehicles, or 4-500 vehicles per 1,000 population by 2030.