China Green-Lights Subsidies on 71 Fuel-Sipping Vehicles

Just the Facts:

• China has granted subsidies to a list of 71 fuel-efficient vehicles.
• The vehicles, all with an engine capacity of 1.6 liters or less, will be entitled to a $441 subsidy per car.
• Sixteen Chinese automakers have cars on the initial list.

SHANGHAI, China — China has granted subsidies to a list of 71 fuel-efficient vehicles. The Chinese government is looking to promote vehicles that use less fuel to address pollution and to safeguard energy security, the country's top economic planner said.

The vehicles, all with an engine capacity of 1.6 liters or less, will be entitled to a $441 subsidy per car if they reduce fuel consumption by 20 percent, the National Development and Reform Commission said in a statement.

Sixteen Chinese carmakers, including BYD Automobile and Chongqing Changan Automobile, have vehicles on this initial list, the NDRC said. More models that qualify for the subsidies will be included in the future, it said.

Auto analysts said the subsidies, which aim to popularize the more costly fuel-efficient vehicles, will help enhance their price competitiveness and boost sales.

Shanghai General Motors said it has 12 models on the subsidy list, including the Chevrolet Sail, the 1.2-liter Chevrolet Lova, the Cruze 1.6MT and the new 1.6-liter turbo-engined Buick Regal. The carmaker said it plans to speed up producing new-energy vehicles and cut fuel consumption of its models by another 15 percent by 2015.

Guangqi Honda has six models on the list, while China's home-grown company BYD, backed by U.S. billionaire Warren Buffett, said its F0 subcompact car is eligible for the subsidies.

Some carmakers said they were not sure on what basis the subsidies will be given. An official from Changan Auto said the firm is not sure "whether the subsidies would be given in terms of production capacity or sales."

Despite the underdeveloped infrastructure for electric vehicles, such as battery-charging stations, China wants about 500,000 green vehicles, including hybrids and electric cars, on the roads by 2011.

The government has also said it would offer subsidies of as much as $8,840 for plug-in hybrid and electric cars.

Inside Line says: Slightly confusing but determined method by the Chinese government of making environmentally friendly vehicles more affordable and thus desirable. — Vivian Jin, Correspondent