The central government has detailed a stimulus plan encouraging farmers to buy automobiles, which may bring a surge in auto sales in rural areas, experts said yesterday.

After the central government announced in January that it would provide 5 billion yuan (US$732 million) to subsidize rural residents' automobile purchases, the Ministry of Finance announced over the weekend the subsidies for automobile and motorcycle purchases would be 10 percent and 13 percent.

Farmers who buy light trucks and minivans from March 1 to Dec 31 this year will get a 10 percent discount, with a subsidy ceiling of 5,000 yuan.

Subsidies of 2,000 and 3,000 yuan can respectively be used to replace old three-wheeled and four-wheeled vehicles.

From Feb 1, 2009, until Jan 31, 2013, farmers who buy motorcycles would receive a 13-percent price refund, with a subsidy ceiling of 650 yuan.

Every rural household is limited to purchasing two motorcycles, and farmers are not allowed to resell their vehicles for two years, according to the scheme. Farmers who have bought the vehicles can apply for the subsidies with their receipts and certificates for the vehicles' operation.

Yang Dayong, deputy director of the sales department of Chongqing-based Chana Auto Co Ltd (ChangAn), said the new subsidy policy would likely spur a surge in minivan sales.

ChangAn and SGMW are the two largest minivan makers, accounting for 21 percent and 51 percent of China's minivan market.

Because of the auto stimulus plan, ChangAn had sold 11.3 percent more units in the first two months of 2009 over the same period last year. Yang predicted ChangAn's minivan sales in 2009 would increase 25 percent year-on-year.

(Xinhua News Agency March 16, 2009)