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China Extends Old-for-New Incentives

Effort to maintain momentum as economy shows signs of trouble.

by on Jun.21, 2010

Chinese makers could benefit big from an extended cash-for-clunkers program.

China’s Ministry of Commerce, hoping to forestall a potential slump in the country’s automotive market, have decided to extend their own version of the cash-for-clunkers program.

The “old car for new” subsidy, which expired on May 31, will now run until at least the end of the year, and provides cash incentives of up to $700, or 6,000 yuan, for those who trade in an outdated vehicle for a new model.

While the program is designed to maintain momentum in the car market it has a secondary purpose, much like America’s clunkers program, which was intended to help rid the roads of old, fuel-guzzling, smoke-spewing vehicles.

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That’s even more important in China, which is only now ramping up its vehicle emissions standards to world-class levels.  Most older models don’t come close to meeting today’s smog rules, a particular problem in pollution-choked cities like Shanghai and Beijing.