Shanghai to offer hybrid subsidies

Motorists in Shanghai are set to get a one-time subsidy of up to 20 per cent of the retail price on eco-friendly cars under a scheme launched by officials in the Chinese city.

The incentives, to be offered in 2010 and 2011, will offer a maximum subsidy of $2,923 for the purchase of a hybrid, all-electric or fuel cell passenger vehicle. Drivers of fuel-efficient cars will also be offered incentives, including a break on some road taxes and access to more streamlined auto registration processes.

Elsewhere in the country, the south-western city of Chongqing is offering a subsidy of $6,300 to buyers of hybrid cars made by a local company.

The rebate applies only to the Jiexun brand hybrid sedan produced by Chang'an Auto, which is headquartered in Chongqing. The Jiexun, slated to be launched in June, is expected to sell for between $15,400 and $22,000.

Shanghai and Chongqing are the first of 13 major cities in China that intend to offer incentives to encourage the take up of green cars. The rebates fall under the federal government's $3bn initiative to subsidise about 60,000 hybrid, electric and fuel cell vehicles by 2012.

The measures are designed in part to help China's automakers develop and sell alternative energy cars. The government has set a production target of 500,000 hybrid or electric vehicles to be made domestically by the end of 2011, and a number of domestic firms, including the ambitious BYD Auto, are battling to address the growing market.

China produced 9.3 million cars in 2008, making it the world's second largest automaker after Japan. Most of the cars made in the country are destined for domestic sale.