The Chinese government is backing environmentally-friendly cars in a range of new measures designed to boost domestic automobile demand, the Wall Street Journal reports today (23rd March).

Tax incentives for vehicles with engines of 1.6 litres and under and a major investment to encourage people in rural areas to buy greener cars have already been announced in Beijing.

The latest stimulus package involves a $1.5 billion injection into research subsidies over the next three years to encourage automakers to devote more attention to electric-vehicle technology.

Announcing the plans on its central website, the government stated that it wants to see 500,000 "new energy" vehicles produced, such as all-electric battery cars and plug-in electric hybrid vehicles.

With sales growth in China slowing to 6.7 per cent last year, it is hoped that the move will see such greener alternatives accounting for roughly five per cent of total passenger vehicle sales.

The government is also committed to reducing the current total of 80 automakers by cutting the number of manufacturers down from 14 to ten through mergers and acquisitions.

Meanwhile, CSM worldwide has forecasted China's overall vehicle sales growth for 2009 to be between six and seven per cent, following on from last year's ending of a decade of double-digit growth.

Source:

China Uses Green Cars To Bolster Auto Sector (23/03/09)
http://online.wsj.com/article/SB123773108089706101.html