China's Green Car Subsidy Program Fails to Boost Small Car Sales

2009 Nissan March

In brief: China instituted a green car subsidy program that took effect about six months ago. Since then, sales of vehicles with engines of 1.6 liters or smaller have dropped, not risen.

The word

Chinese small cars

Since beginning the green car subsidy program to encourage the purchase of smaller, more efficient, and green technology cars, sales for these vehicles have dropped in China at a rate of 1.42% per month for five months.

The program began on the New Year (Chinese), and by July has lowered sales of small and compact cars a total of 4.12% rather than raised them.

The green car subsidy program rewards automakers for every qualifying vehicle they make, theoretically lowering their price by a like amount for the consumer. The payout is the equivalent of $443USD per car.

The Chinese government has indicated that more incentives may be forthcoming.

And so ...

Someday some of these governments might realize that incentivizing one at the expense of another is not always a good thing.

Photo credits: Global Times

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