context: The automobile sector saw decline deepen in 2019, and NEV firms suffer too. The consensus is that state purchase tax adjustments, stricter emission standards and declining NEV subsidies contributed to uncertainty. But officials are now stressing stability and predictability for 2020. Paradoxically, previously announced plans to end NEV purchase subsidies may now be delayed.
The car industry may recover during 2020, said Miao Wei 苗圩 MIIT (Ministry of Industry and IT) minister at EV100, predicting little or no decline in sales, bottoming out around 25 million vehicles in 2020-21. Miao identified weak technological and innovative capabilities as major challenges for the sector. Rather than waging a 'price war', firms should invest in R&D and global brand recognition, advised Miao.
Following 2019 support policies for rural sales and urban pick-up trucks, MIIT is studying measures to support manufacturing, like removing market entry barriers, said Miao. He also called for rolling out emission standards gradually, discouraging localities from adopting China 6 fuel standards ahead of the national schedule. (Note: Several cities have done this already.)
Rebounding NEV (new energy vehicle) sales in December 2019 show the market has digested the impact of purchase subsidy cuts, said Miao, noting 2019 NEV sales managed to roughly maintain 2018 levels. They were down only 6 percent, reaching 1.18 million, reported CAAM (China Association of Automobile Manufacturers) on 10 Jan 2019.
Purchase subsidies were phased out too suddenly in 2019, said Dong Yang 董扬 EV100 vice president, but predicts NEV sales will rise in 2020. Dong argues the state create stability by
- keeping 2020 purchase subsidies at 2019 levels
- extending the exemption from purchase tax to 2025, setting a 50 percent reduced purchase tax for 2016-30
Miao acknowledges NEV subsidies would not be cut further in July 2020, reports Caixin. Instead, Science and Technology Daily reports that Miao said MIIT will
- finalise the NEV development plan 2021-35 in H1 2020
- reconsider NEV subsidy policies
- support electrification of public transport and similar sectors
- revise dual-credit system management measures