More Chinese local governments are taking steps to generate big-ticket spending by consumers with subsidies for new car purchases, hoping to unleash 6 trillion yuan (US$874 billion) of excess savings into the economy. Authorities in the central Hubei province offered as much as 90,000 yuan discounts on cars purchased from Dongfeng Honda Automobile, according to promotional leaflets at car dealerships. A 4,000 to 90,000 yuan rebate would also apply to other models produced by another Dongfeng Motor joint-venture. “Such subsidies could buoy Dongfeng, a major employer there,” said Iris Pang, the Hong Kong-based chief economist for Greater China at ING Bank. “In turn, this will help the local government stabilise local employment and growth.” Dongfeng Motor, based in the provincial capital of Wuhan, is a Chinese partner of PSA Peugeot Citroën of France and Nissan Motor of Japan. Hubei is a latecomer, though. At least 15 other local governments have earlier rolled out similar incentives to fire up sales. The Shanghai municipality in January revived a 10,000 yuan subsidy for consumers replacing their petrol-guzzling cars with new-energy vehicles (NEVs). The subsidy originally expired at the end of 2022. The government of the southwestern city of Chongqing this month unveiled a trade-in programme for NEV buyers, dangling a 3,000 yuan sweetener through June 30. In southern Guangdong province, officials have launched car trade-in incentives and auto-themed promotion to spur consumption. Can US$874 billion of excess savings help propel Chinese consumer stocks? China expects to generate about 5 per cent economic growth in 2023, according to the target unveiled by Premier Li Keqing at the two sessions in Beijing this week. The Hubei provincial government, however, has set a 6.5 per cent target, versus an estimated 4.7 per cent expansion in 2022. Chinese consumers have stored up 6 trillion yuan (US$874 billion) in excess savings during the Covid-19 crisis, tripling the level from 2019, according to data published by Tianfeng Securities. Analysts expect them to be unleashed in big-ticket post-pandemic spending like housing and car purchases to help sustain the recovery momentum. Passenger car sales in mainland China fell 26 per cent from January 1 to February 19, versus the same period a year earlier, according to data published by the China Passenger Car Association. Dongfeng registered a 64 per cent drop in sales in January, according to its latest filing. “Subsidies are still vital to help revive car transactions,” said David Zhang, an analyst with the research centre for automobile industry innovation at the North China University of Technology. “It is not a small amount to most potential car buyers. It would lure them from the sideline.”