Rural subsidy program for vehicle purchases expanded

A new round of a rural subsidy program for vehicle purchases is expected to include both cars with less powerful engines and heavy-duty trucks, the China Securities Journal reported on Wednesday.

Insiders said that the program -- which already offered one-time subsidies for the purchase of vehicles with 1.3-liter engines or less -- will likely be expanded to heavy-duty trucks, in a bid to boost domestic demand.

The rural market has become an important engine for the growth of home appliances and automobile consumption.

Since April, the growth rate of retail sales in rural areas has exceeded that of urban areas, according to data from the National Bureau of Statistics.

China's auto ownership rate in 2011 was 70 per thousand people, about half of the world average.

Auto ownership in second and third-tier cities is relatively low, but it's expected to become the main force driving the growth of China's auto market.

Compared with urban residents, farmers and low-end manufacturers have greater potential for consumption, because their incomes are growing much more considerably than those of their urban counterparts.

Analysts said that, in view of the macroeconomic growth slowdown, automobile consumption may play a significant role in stimulating domestic demand, and that the rural subsidy program for auto purchases is one of the best stimulus policy options at present.