“Govt to exclude JV cars from purchase”
Published on March 3, 2010 by Tycho de Feijter
China Daily reports that the government will no longer buy cars made in a joint venture with a foreign automaker. That means no more Audi’s, BMW’s and Benzes. Humble public servants will have to use Geely’s, Chery’s and BYD’s now. The government hopes that the new rules will “boost” the true domestic automakers. It might boost ‘m a bit, the government spent 80 billian yuan on cars in 2008, that is 11.7 billion US dollar. China Daily talks:
The proportion of home grown brands may make up at least 50 percent of new purchases of government-owned cars, as required by a draft plan on procurement of official cars, Jinan Daily reported Friday.
The plan will also change the guidelines for vehicles to be purchased, basically excluding mostbrands made by joint ventures, the newspaper reported.
Ministerial level officials should have cars with an engine up to 2.5 liters and a price below 350,000 yuan ($51,268). For a vice-ministerial level official, the car should be priced below 300,000 yuan with an engine smaller than 2.5 liters. And other cars should be less than 160,000 yuan with engines smaller than 1.8 liters, according to the draft plan.
As the biggest item on the government’s purchase list, about 80 billion yuan were spent on vehicle purchases in 2008, accounting for 20 percent of the year’s government procurement, according to statistics by the China Machinery Industry Federation.
Foreign vehicle producers are drooling over the world’s biggest government procurement program of vehicles. “As long as we lower the purchase criteria of vehicles, foreign producers will lose enthusiasm in bidding,” said Xue Xu, professor at the school of economics of Peking University.
The domestic auto industry will get a boost as home-grown brands are favored, said Dong Yang, secretary general of the China Association of Automobile Manufacturers.