Finance, Commerce ministries to raise subsidy to replace clunkers

A subsidy program for auto replacement which began in July of this year by the ministries of Finance and Commerce will be raised in the next few days.

The two ministries have decided to raise the subsidy for most cars mentioned in the program and the range may increase. Statistics from related ministries show that since the program kicked off, the number of cars replacing old ones was much less than expected. The main reason is that the subsidy is much less than selling the car in the secondary market.

Until yesterday, the number of replaced cars in Shanghai is only a few dozens. “After some adjustments to the program it will be released next month as soon as possible,” said Luo Lei, deputy secretary of the China Automobile Dealers Association. “The new program will have enough incentive to make the consumers decide to replace their old cars for new ones. In a simple word, the subsidy of the old cars will more economical than selling them to secondary markets.”

The originally program launched in July says that consumers who trade in their used mid-and small-sized trucks and some types of mid-sized passenger cars for new ones will receive a subsidy. Subsidies will also be given to consumers who sell vehicles that no longer meet the government's new emission standards but are still within their life expectancy. Consumers can bring old vehicles to a reclaim station within a year through May 31, 2010 and can apply for subsidies between August 10, 2009 and June 30, 2010. Rebates will be paid within 15 working days after consumers provide a confirmation note from the recycling plant and show receipts for their new vehicles to the local government.

Agencies and Wang Yang contributed to this story

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