Carmakers get boost as subsidy policy extended
Shares in carmakers surged yesterday after the central government extended a subsidy programme for the trade-in of older and bigger-polluting vehicles to the end of the year.
The Ministry of Communications on Sunday said it had jointly decided with the Ministry of Finance and the Ministry of Environmental Protection to extend the programme.
The move, foreshadowed by the mainland media late last month, means owners of older cars will continue to enjoy subsidies of up to 18,000 yuan (HK$20,500) if they trade them in for new ones earlier than their economic life by a certain number of years. This had been raised from a cap of 6,000 yuan per car when the programme was launched on June 1 last year. Among locally listed mainland carmakers, Greatwall Motor shares leapt 8.9 per cent to HK$13.74, Dongfeng Motor surged 6.8 per cent to HK$8.66, Geely Auto Holdings jumped 5.3 per cent to HK$2.58, while Denway Motor gained 2 per cent to HK$3.63.
The subsidy scheme was part of Beijing's economic stimulus package to combat the fallout from the global financial crisis, which also included a cut in consumption tax on cars with engine capacities of 1.6 litres or less.
The measures were aimed at reining-in worsening roadside air pollution in cities, at the same time promoting the sales and production of environmentally friendlier vehicles amid an economic slowdown.
News of the subsidy scheme's extension came after year-on-year growth in car sales on the mainland slowed to 25 per cent last month from 34 per cent in April and 77 per cent in the first quarter, which had depressed auto-maker shares.
Although the annualised slowdown was partly explained by last year's economic recovery from the depth of the crisis, the fact that last month's sales were 20 per cent below April sales raised concerns that car sales could be dampened by weakening property and stock markets and bank credit tightening.
The vehicle industry was also bolstered early this month by announcement of subsidies of up to 60,000 yuan for individual purchases of electric vehicles.
How Hong Kong-listed carmakers' shares performed yesterday
Great Wall Motor: +8.9%
Dongfeng Motor: +6.8%
Geely Automobile: +5.3%
Brilliance China: +2.9%
Denway Motors: +2%
BYD Auto: +2%