China limits official cars to domestic brands

China plans to require government officials to strop purchasing foreign-branded cars in favor of local vehicles in an effort to boost the industry amid strong competition, The Wall Street Journal reported. The Ministry of Industry and Information Technology posted a list last week of 412 approved vehicles for purchase, which included no foreign models. Currently, government officials are allowed to buy any domestically-produced brand. However, government auto purchases contribute less than 5% of China’s total passenger-car demand, estimated at between US$11 billion and US$12.7 billion. Volkswagen (VOW.FRA) executives believe this measure is unlikely to have significant negative impact on China sales. The firm said on Monday that “the economic consequences of these new regulations are limited.” The majority of Volkswagen’s sales in China are with private costumers. “The amount of the so-called fleet sales with government vehicles has been at a lower single-digit percentage range for years.”