China urges removal of car purchase restrictions

The Chinese central government has urged local authorities to remove purchase restrictions to boost the country's automotive consumption.

"Some administrative restrictions on car purchases should be removed in an orderly manner. Local governments in the cities that have introduced a quota scheme for licence plates are encouraged to increase their quotas," said Yan Pengcheng, director of department of national economy of the country's top planning body NDRC.

China also aims to shift the focus of its management of the automotive industry to usage from purchasing, creating more conveniences for consumers after they buy a car, Yan added.

The move is part of the country's basket of measures to stimulate domestic consumption of cars, home appliances and real estate. China's economy grew by 2.3pc in 2020, the slowest since 1976, with nationwide Covid-19 lockdowns shrinking the country's GDP by 6.8pc on the year in the first quarter of 2020.

China's passenger car sales fell by 6pc in 2020 to 20.18mn because of disruptions in the first quarter during the Covid-19 outbreak, according to data from the China association of automobile manufacturers.

But domestic car sales rose in December for an eighth straight month following a sharp recovery in consumer demand from the second quarter of the year, boosted by a variety of stimulus measures provided by the government.

China introduced 87 supportive automotive policies in December to raise vehicle demand. Continued government measures to boost auto demand this year are expected to provide further support.

Beijing provided another 20,000 new energy vehicle (NEV) licence plate quotas to citizens in the fourth quarter of 2020. Foshan city in south China's Guangdong province has been offering a subsidy of 2,000-5,000 yuan/unit ($306-765/unit) for new car purchases since 1 March. The Guangzhou municipal government also offered a subsidy of Yn10,000/unit ($1,460/unit) to NEV buyers and a Yn3,000/unit subsidy to consumers of fossil fuel vehicles from March-December.

The government last year also launched a campaign to promote the use of automobiles in rural areas and trade-ins of used vehicles.