Subsidies given for scrapping old cars

A sales clerk walks past brand new cars at a dealership yesterday in Shanghai. China's passenger car sales fell 6 percent in May from a month earlier amid weakening demand because of the expiry of incentives to boost buying, high fuel prices and production cuts by some Japanese auto makers following the March earthquake and tsunami, the China Passenger Car Association said yesterday. Domestic auto makers sold a total of 1.01 million cars, sport-utility vehicles, multi-purpose vehicles and minivans last month, a drop from 1.08 million units in April.

China will offer some auto owners up to 18,000 yuan (US$2,769) in subsidies if they register to scrap their old vehicles this year, the finance ministry said yesterday.

The program is open to rural owners of passenger vehicles that are between six and 15 years old, city buses between eight and 15 years old, and heavy trucks between 10 and 15 years old, the ministry said on its website yesterday, as it cited a new notice issued jointly by the ministries of finance and commerce.

The cash-for-vehicle program doesn't include urban owners of passenger cars.

The move is expected to cut emission in the world's biggest auto market. More autos were added to the roads in China as consumers' purchasing power increased amid the country's rapid economic growth.

Last year, China ended its program to offer up to 18,000 yuan in subsidies for car owners who upgrade their outdated vehicles for new and fuel-efficient models. The program aimed to boost auto sales, promote green cars and was an incentive to revamp the industry as the economy began to recover from the global financial crisis.