China to revive "cash for clunkers" program

China’s cabinet agreed last week to revive a cash-for-clunkers program to help bolster slumping growth in both the auto sector and the overall economy, Bloomberg reported, quoting an unnamed government official. Relevant ministries are still working out which vehicles will be covered and how much funding they will receive, as well as conducting feasibility studies on subsidizing car purchases in rural areas, the official said. The news helped boost shares of SAIC Motor Corp (600104.SH), Geely Automobile Holdings (0175.HKG), Great Wall Motor (2333.HKG) and Dongfeng Motor (0489.HKG). In 2009, China introduced incentives for car purchases, including a cash-for-clunkers program, that spurred RMB49.6 billion (US$7.8 billion) in new car purchases the following year. Vehicle sales in China fell 1.3% year-on-year in the January-to-April period, the market’s worst performance since 1998, according to the China Assocation of Automobile Manufacturers.