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China’s green example to the world March 13, 2009

Posted by Richard Aucock in What I've mused upon today.
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Earlier in the year, I had dinner in London with visitors from China’s motoring media. They were here on a fact-finding mission, and were keen to touch base with like-minded sorts from the UK.

It was a superb evening, full of lively debate and contrasting viewpoints. I tried to give them lots of insight, but reckon I took just as much from the evening, if not more. I promised in particular to follow one tip-off closely: mark my words, said several of our Chinese guests – new car sales back home are going to skyrocket.

This was in complete contrast to the dreadful 2008 gloom we in the UK had been suffering. What made them so confident? Over to Kevin Chen, CEO of Gasgoo: ‘From January 20, the Government will cut the sales tax on cars 1.6-litres and under, from 10 percent to 5 percent…’

In other words, smaller, more eco-friendly models were to be given an incentive: they’d carry half the tax of thirstier ones.

chinas-green-example-to-the-worldAnd how it’s worked. From being in the doldrums, China’s new car market was up a startling 25 percent in February. A quarter! To get a measure on how many cars this is, consider that in February alone, over 600,000 new cars were sold…

The net effect is huge. Massive. Even though 1.6-litres and under doesn’t sound that green compared to UK green schemes, it’s a big difference for China. Over there, the European ‘downsizing’ trend has yet to catch on. This is thus an admirably green and eco move – and, with the promise of more cash in its back pocket, has seen a generally save-not-spend society hit car dealers in droves.

Why do I mention this? Well, I’ve just been called by City Talk Liverpool, to speak on their Sunday morning show with Edward O’Hara MP. Rob McLoughlin is the presenter, and we’ll be debating this week’s potential good news for Land Rover Halewood, plus the implications of what Mandelson’s been saying.

The relevance of China, then? Well, the car tax reduction is a useful case study of  how the world’s biggest car market responded to green new car sales incentives…