Govt told to use Chinese cars

Requiring all government departments to use Chinese vehicles may not necessarily promote sales of domestically made cars over foreign brands, industry insiders said.

Among the 400 plus automobile options on a list that was published by the Ministry of Industry and Information Technology on Friday, joint venture brands such as Volkswagen and Toyota, which were on the list for 2009-10, have all been replaced by home-made brands including JAC from Anhui Province and Harbin Hafei Automobile.

Dong Yang, executive vice chairman of the China Association of Automobile Manufacturers, who also participated in making the list, explained to China National Radio (CNR) that the policy is not aimed at rejecting joint venture companies, but complies with criteria for selecting government car brands.

"The research and development funds of the brand should account for more than 3 percent of sales. Domestic brands usually meet this requirement while joint venture brands don't," he said, adding that another criterion is the performance to price ratio, which regulates that the exhaust volume should not exceed 1.8 liters and the price must be lower than 180,000 yuan ($28,584).

But insiders admit the move shows the government's determination to help boost sales of Chinese car brands.

"Considering the large number of cars involved in government procurement every year, the policy will help lead to a boom in Chinese brand cars," Su Hui, a senior auto market analyst with the China Automobile Dealers Association, told the Global Times.

Outlook Weekly cited statistics that showed by the end of 1990s, there were 3.5 million government cars around the country, and the number increased by more than 20 percent every year.

Yang Xueliang, Geely's director of public relations, applauded the policy, telling CNR that at the government level, the development of domestic brands is being supported.

"But time is still needed to transform the support we get into sales," said Yang. "Home-made brands should not completely place their hopes in government policy, but development needs our continuous efforts."

Southcn.com, a news portal of Guangdong Province, pointed out that the policy is hugely significant to home-made car brands because government cars can act as a symbol of status for private car owners, citing the popularity of Audi cars as an example.

But Du Fangci, assistant secretary-general of the China Association of Automobile Manufacturers, told the Global Times that he doesn't expect much from the policy.

Du said that the average revenue of home-made brands was about that of joint venture brands in 2004.

"Most of the home-made brands can meet the standard of government cars, but for high-end cars, such as the ones used to receive State guests, the home-made brands have no advantage in quality compared to joint venture cars," said Du.