Sales of subsidized energy-saving autos hit a wall

Energy-saving vehicles are getting the cold shoulder from Chinese consumers due to the indifference of car dealers and the mentality of buyers.

The inconvenient truth appeared after China allocated 6 billion yuan (952 million U.S. dollars) in May to promote the sales of energy-efficient autos with engine displacement of 1.6 liters or less amid the country's ongoing green drive.

The move was seen as an extension of the 12 billion yuan China offered as special subsidies for energy-saving vehicles in 2010.

But at an auto dealership in the south China city of Nanning, consumers have shown little interest in energy-saving cars despite the 3,000-yuan subsidy available for each vehicle.

"They do consume less fuel, but they are only equipped with 1.5-liter engines," said Chen Qiang, who was at the dealership to pick out his first car.

The 30-year-old businessman, who could not clearly explain how a car's discharge capacity would influence his driving experience, insisted on buying a car that "looks more decent," rather than a small-sized one, which most energy-saving vehicles are.

"Anyway, other cars also have discounts, don't they?" Chen said.

Discounts are given to almost all non-subsidized vehicles in the shop, making them at least as attractive as the subsidized ones, price-wise.

Auto experts have said the current subsidy level for energy-saving vehicles is not appealing enough to sway China's young people, a group with increasing purchasing power.

"The subsidy of 3,000 yuan for each car is too little," said Yan Guangming, a senior Chinese commentator on auto-related issues.

"Even a car plate costs much more than that negligible subsidy in some cities," he said.

In east China's Shanghai, car plate prices surpassed the 60,000 yuan benchmark in August amid growing interest from local bidders.

A large number of middle-class car buyers, like Chen Qiang, frown upon the subsidized energy-efficient vehicles, most of which come from Chinese brands. They care more about the look and maximum speed of a car than how much it reduces carbon emissions.

"I prefer the 'better' ones," said Cao Gang, a 32-year-old planning to buy a car in Beijing. "The subsidized ones do not look good and they do not have huge interior space like the other ones."

Since the latest subsidy policy was unrolled, no obvious surge has been reported in sales of AO-level (small) and AOO-level (mini) vehicles, which account for a large number of the energy-efficient cars.

Car dealers' indifference has also hampered sales of energy-saving automobiles.

Hao Qingfeng, a Beijing-based expert who handles complaints about car dealings, said he has already received a lot of complaints about the subsidized energy-saving vehicles.

"Some car dealers are simply not interested in them," he said. "They tell car buyers that they do not know about the subsidies or use any excuse to decline giving them subsidies."

A sales manager at an auto dealership in Nanning said the complicated application procedures for the subsidies have weakened car dealers' enthusiasm.

"We have to pay the subsidy to the car buyers with our own money before we are reimbursed," said a manager who preferred not to be named.

He added that the slow capital backflow has piled pressure on him, as his business hinges on capital.

Hao, the Beijing expert, suggested offering energy-saving vehicles more preferential policies on taxes, parking fees and insurance.

"There should be other preferential policies besides the one-time subsidy given to them," he said.

Other suggestions from Chinese auto experts include extending government subsidies to producers and dealers of energy-efficient vehicles.

Every 100 urban households owned 18.6 units of vehicles as of last year in China, where the total number of vehicles has surpassed 100 million.