SOUTHWEST China's Chongqing will finance purchases of small-engine vehicles in its rural areas to counter the downturn in auto sales, the country's first local incentive program for the auto market.

The city's rural buyers of mini buses with engines of 1.6 liters or less and mini trucks and light trucks under 7.5 tons will receive a 6 percent subsidy on the sales price, with a maximum of 3,000 yuan (US$471) for each vehicle, the local government said on its website over the weekend.

The program will cover vehicles that are made by Chongqing-based automakers and bought in the city. Each qualified consumer can make only one subsidized purchase.

In the most bearish start to the year since 2005, the vehicle sales reversed 2 percent on an annual basis in the first quarter after the incentive-fueled, double-digit growth rates over the past few years.

Last month, the central government unveiled a 6 billion yuan subsidy scheme for buying vehicles with engines of 1.6 liters or less. But market observers think that the stimulus effect may pale in comparison with that of the previous 10 billion yuan program which ended last year.

That may be the reason why automakers are launching their own incentive programs to try and reverse the drop in sales.

Source:shanghaidaily.com