Energy saving vehicles will be provided subsidy by Chinese government to boost the demand. The move was done in order to increase domestic spending in China that slowed down and affected the GDP in the first quarter to 8.1%. The end user sales of automobiles in the first four months were negative. Sales of micro- and economy vehicles made mostly by Chinese independent brands have been falling faster and their market share has been declining since 2011.
The state council has decided to allocate $ 952 million or 6 billion yuan as subsidy to support energy saving vehicles with displacement of 1.6L and smaller. However analysts were of the view that the stimulus was too small to boost domestic consumption when compared to stimulus given in 2009 and 2010.
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