What China Did to Boost Automakers

Mar 13
08:49

2009

Michael Lombardi

Michael Lombardi

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There was some good news out of China about that country's auto industry. In an Associated Press report quoting the Xinhua News Agency, it was said th...

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There was some good news out of China about that country's auto industry. In an Associated Press report quoting the Xinhua News Agency,What China Did to Boost Automakers Articles it was said that customers are taking advantage of government incentives to purchase more fuel-efficient cars.

In February, China's sales of domestically manufactured vehicles roared ahead some 25% over the same month last year. According to the China Association of Automobile Manufacturers, February's total sales were 827,600 units, up some 12% from 735,000 sold in January. Total production last month grew to 807,900 units, up approximately 23% from the same month last year. The report quoted the Association as saying that passenger automobiles with engines under 1.6 liters accounted for 70% of the total passenger vehicle market.

There are some new government incentives in China that included subsidies and tax cuts for small-car buyers and, clearly, the data suggest that the incentives are working.

This is exactly the kind of policies I think we need more of to get the domestic auto industry turned around. Ford has been saying this for quite some time. Let's get more incentives in the marketplace from government, so that consumers are motivated to scrap their inefficient clunkers and get buying some fuel-efficient vehicles.

This is also a great way to help the green economy become more practically involved in consumers' daily lives. More tax incentives for fuel-efficient and hybrid vehicle development will do just as much or even more than bailing out corporations with failing business models.

I've always been an auto enthusiast and I've never been particularly loyal to a brand. I enjoy trying new vehicles from different manufacturers and I appreciate good engineering. I also like simplicity. My next vehicle is going to be something that's highly fuel-efficient and practical for a family. I'd even consider a diesel passenger vehicle, as the pollution control on diesel engines has improved dramatically in recent years.

Some sort of government incentive program to motivate people to scrap their old vehicles for new ones would really help the auto industry which has been sideswiped by a spike in gas prices and then the recession. Getting old vehicles off the roads as part of a new vehicle incentive program would have the added benefit of reducing pollution on top of stimulating the economy. As you know, new vehicles are way more fuel-efficient than old ones, they produce less pollution from the tailpipe, and they are safer.

Eons ago, my great uncle gave me a 1977 "Chrysler New Yorker Brougham" that he won in a poker game. This two-door car was the ultimate boat. I had a seven-liter 440 engine under the hood and it ate fuel like there was no tomorrow. I used to joke that it needed all that power to haul its own fuel tanker behind it. As you might imagine, that car floated down the road like a dream. It didn't take corners too well, but if you wanted to cruise in a straight line, it was the greatest. I sold that car to a retired mechanic maybe 20 years ago and, up until only recently; I used to see him still driving it!

The best thing we can do for the domestic auto industry is to get more incentives in the marketplace to get people back in the showrooms. Let's try what China's doing. According to the data, it seems to be working.

Profit Confidential

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