China will introduce new measures to boost consumption in automobiles, a State Council's executive meeting chaired by Premier Li Keqiang decided on Wednesday.
The body agreed to stabilize and expand auto consumption, encourage the local authorities to fine-tune restrictive measures regarding car purchases and raise the license plate quota ceiling.
Promotion campaigns will be carried out for vehicle purchases in rural areas and trading in used cars for new ones. In rural areas where conditions permit, residents will also be encouraged to buy trucks with a capacity no bigger than 3.5 tonnes and passenger cars with engines no bigger than 1.6 liters.
The authorities will also subsidize car purchases for people upgrading from gasoline-powered vehicles with a national emission standard of three or below to speed up the phasing out process. The construction of parking lots and charging piles will be stepped up.
Since the beginning of this year, various favorable policies introduced by the central government and local governments have stimulated potential demand in the auto market and accelerated the domestic auto market's recovery.
According to the China Association of Automobile Manufacturers, about 2.55 million automobiles have been produced in China in October, and roughly 2.57 million have been sold, with a year-on-year growth rate of 11 percent and 12.5 percent, respectively.
The number of automobiles produced and sold has grown for seven consecutive months as of October. The sales of passenger cars in China are expected to realize double-digit growth in 2021, according to Jiang Xueqing, a researcher at Orient Securities.
Jiang believes that as demand has gradually stabilized recently, companies with business related to passenger cars, parts and components have been favored by the market, and their valuations have been gradually restored.
It is expected that the auto climate index will continue to rise in the fourth quarter, according to Jiang.
Figures from the Ministry of Commerce show that in 2019, retail sales in automobiles, home appliances, furniture, construction materials and catering sectors accounted for some 25 percent of the total retail sales in China, and retail sales in rural areas accounted for 14.7 percent of the total.
In October, total retail sales saw a 4.3 percent year-on-year increase, registering positive growth for three consecutive months.
"At present, the prominent restraint on economic development lies in consumption as the main growth engine was seriously affected by COVID-19 earlier this year. It has been picking up in the past few months, yet notable difficulties remain in restoring normal growth. We need to explore new highlights in consumption to spur domestic demand," Li said.