Auto shares rise on stimulus plan
China plans to reduce the number of major domestic carmakers from 14 to 10 through government-backed mergers, the China Securities Journal reported, citing the detailed government stimulus plan for the auto industry that is due to be released in the next few days. From March 1st, the government will also start rolling out RMB5bn (US$732m) of subsidies to support vehicle purchases in rural areas.
The plan aims to promote industry consolidation and support national brands, through cutting to 10 the 14 automakers that currently account for 90 percent of the country’s total domestic-car brand sales. The market share of domestically-branded cars is intended to exceed 40 percent, the report said, without mentioning when these objectives would be realised.
The government will begin offering RMB5bn (US$732m) of subsidies to support vehicle purchases in rural areas from March 1st to December 31st. One-off allowances will be given to rural residents who upgrade their three-wheeled vehicles and low-speed trucks to mini-trucks, or purchase new mini-vans under 1.3 litres.
Auto shares rose 0.47 percent on average, providing some respite to the plummeting market.
Harbin Dongan Auto Engine Co (SH:600178), China’s only manufacturer of an auto engine entirely developed in-company, surged to the 10 percent trading cap.
Chongqing Changan Automobile Co (SZ:000625) saw its seventh consecutive trading day at the 10 percent cap. B shares in the company closed at HK$3.03 today, and Chongqing Changan had announced that it will buy back its B shares at prices below HK$3.68. The company is aiming to produce two million cars next year, 60 percent of which will be self-branded with patented technologies.
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