New energy vehicles see large influx of new sales as tax exe
This Monday marked the first day that new energy vehicles are exempted from the vehicle purchase tax. According to a report appearing to the Securities Times, orders for new energy vehicles have soared through the roof this week. New energy vehicle sales are expected to have undergone a new wave of growth by the end of the year.
Thanks to increased government support and favorable market conditions, new energy automobile sales in China have continued to grow at an impressive rate. In his assessment, China Association of Automobile Manufacturers Deputy Secretary General Dong Yang predicts production and sales capacities for new energy vehicles to triple this year. Over 50,000 new energy automobiles are expected to be produced and sold in the country this year.
Zhou Chenjie, sales manager of Shanghai EVBUY World Expo dealership, explained that the number of consumers coming to his shop to buy new energy vehicles has increased noticeably this week. "Although we don't have any specific statistics, it is clear that the policy change has been attractive to consumers, " Mr. Zhou stated. A representative from a SAIC Roewe dealership echoed these sentiments, adding that nearly half of the buyers who have already made orders for E50s have shifted their order dates to after September.
The government has taken several steps to promote development of the new energy vehicle industry in China. Last month the National Development and Reform Commission , Ministry of Finance and three other government departments announced policies mandating that relevent bodies purchase a certain number of new energy vehicles for official use. Soon after, the State Council also issued recommendation guidelines on how to further increase the usage of new energy vehicles. The NDRC also issued an announcement on revising electricity prices for new energy vehicles.
However, one thing worth mentioning is that plug-in hybrid vehicles appear to be much more attractive to buyers than pure electrics. Mr. Zhou explains: "Among the buyers at our dealership, 80 to 90 percent of new energy vehicle buyers are purchasing hybrids."
Then earlier this month, the Ministry of Finance and Ministry of Industry and Information Technology announced legislation that allowed buyers of designated new energy vehicles to be exempt from paying the vehicle purchase taxes for vehicles purchased between September of this year and the end of 2017. The MIIT and State Administration of Taxation later released the list of vehicles exempt from the tax. The legislation is the fourth of its kind to be announced since the beginning of the year.
Analysts believe that unpopularity of pure electric vehicles is due to the limited driving range of pure electric vehicles and lacking charging infrastructure in the country. Owners lacking a permanent garage or parking space are even more likely to prefer hybrids over pure electrics. As plug-in hybrids are also eligible for similar subsides to pure electric vehicles, they have managed to gain the favor of Chinese automobile buyers. According to reports, six plug-in hybrid models from JAC Motors, BYD, GAC and SAIC all appear on the Ministry of Industry and Information Technology's list of new energy vehicles exempt from the vehicle purchase tax.
Experts in the industry point out that the largest obstacles hindering the development of the new energy vehicle market lie in high vehicle prices, lack of required infrastructure and protectionist regional policies. In particular, the differing regional policies have led to totally different lists of vehicle models eligible for subsidies, which in turn led to uneven development of the country's new energy vehicle market.
In order to increase the popularity of pure electric vehicles, analysts have recommended that government introduce relevent policies. Previously, the State Council announced its goal of ensuring that over 30 percent of new official government vehicle purchases are new energy automobiles. Although official government automobiles sales have been falling recently due to anti-corruption measures, there are still an influx of new purchases being made for new buses and police vehicles.
Industry Analyst Jia Xinguang commented that the government has displayed considerable resolve to promote the new energy vehicle market through its recent wave of policies. These policies are not only beneficial to manufacturing enterprises, but are also helpful to the industry as a whole. However Mr. Jia also voiced his concerns about problems with infrastructure, such as electric charging posts, that the country still has, adding that policies aimed at resolving these issues are of considerable importance./
Analysts expect new energy vehicle sales to total 70,000 to 80,000 units by the end of this year. According to statistics from the Ministry of Industry and Information Technology, 25,900 new energy vehicles have been sold in the country from January to July, nearly triple the amount produced between January and July of last year. As such, the sales volume for the remaining few months of the year is expected to be over double the amount sold over the first half of 2014./
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