THE CHINESE government aims to cut the number of major car groups through mergers to 10 from 14, an official news- paper reported, as the global economic crisis adds urgency to restructuring the fragmented sector.
The plan, approved this month, also calls for 5 billion yuan ($732 million) in government subsidies from March to the end of 2009 to aid purchases of autos in rural areas, the China Securities Journal quoted unnamed sources as saying.
“Pulling resources together makes sense when the market gets soft,” said Qin Xuwen, industry analyst with Orient Securities.
“I think the government is serious this time as the car market – which has been booming for years – has slowed down significantly.”