Following the issuing of policies to manage government vehicle spending by the Communist Party of China, the market for official vehicles, which accounts for nearly 100 billion yuan ($15.59b), has become the center of attention for automobile industry experts. The policy's preference for own brand vehicles has also become a hot topic. Will the policy be what the government needs to successfully popularize own brand vehicles, and what effects will it have on the market as a whole? Gasgoo.com (Chinese) held a one-week survey on these questions in order to find the answer.

According to the survey, most experts voice support for the government's decision to give own brand vehicles preferential treatment when it comes to selecting official cars. A clear majority hopes to see the government put their support clearly behind own brand vehicles, but also acknowledges that the government's so-called preferential policies are a big step in helping boost the image of own brands.

When asked whether or not the government should make own brand vehicles the center of its official car purchasing plans, an overwhelming 89 percent of respondents answered yes, with only 6 percent opposing the notion. The recently unveiled legislation would allow for preferential policies when government bodies bought own brand vehicles, in order to further stimulate the domestic industry. However, the legislation is unclear as to what said preferential policies actually mean. There are some who go as far as stating the legislation is a step back from early policies announced between 2009 and 2010, which gave clear instructions on how many own brand vehicles should be in service.

One anonymous respondent commented that efforts to get more own brand vehicles in official service have been effortless. While 2009 legislation on how to stimulate the industry showed strong support for increasing the number of own brand cars used as government vehicles, it failed to give any clear guidelines to meet. Documents issued later in the year suggested own brand cars constitute at least 50 percent of government vehicles. However, that suggestion is suddenly nowhere to be seen in the recently passed legislation.


What the new legislation does put forward is emission and price conditions for government vehicles, requesting they be within 1.8 L and 2.0 L and priced under 180,000 yuan ($28,079). While on the surface it seems that this would be the government's way of offering unvoiced support for own brand vehicles, the truth is not so simple. When asked regarding the issue, Chery Spokesman Jin Yibo said that manufacturers would have to make sure to manufacture and price their cars in a way in order to gain government recognition and approval. Mr. Jin added that the minimum vehicles requirement for government cars was still not enough to significantly help own brand makers.

Due to poor perceived value, the government has been slow about bringing in own brand vehicles, going as far as completely ignoring them. As a result, own brand makers have been unable to capitalize on the rapidly expanding market for government cars. In 2005, the government spent 60 billion yuan in buying government vehicles, which grew to 70 billion yuan in 2006, 80 billion yuan in 2008, and exceeded 100 billion yuan last year. In that time frame, Chery, the largest domestic brand for government vehicles, only had slightly over 3,400 of their vehicles bought by the government, constituting only a few percentage points of the total number of official vehicles in use. Furthermore, the scant figures make it very hard to determine what effect the policies have on own brand sales, if any at all.

The second question on the survey asked that, supposing government bodies adopt own brand vehicles as the center of their official car purchasing plans, what influence would it bring to the automobile industry. A slight majority, 51 percent, of respondents believed that it would help strengthen the own brand industry. The notion of being used by the government can help a vehicle gain the perception of being luxurious and exclusive. In other words, being used as a government vehicle is the best sort of advertisement a car can have, helping attract in new buyers. It is this very reason why many in the industry believe Chinese sales of Audis far exceed those of Mercedes-Benz and BMW.


Meanwhile, 29 percent of respondents believe that the largest effect widespread usage by the government would have on own brand cars would be in helping boost their sales results. If only half of the 100 billion yuan spent on government cars in 2010 went towards own brand makers, it would still be enough to help boost the performance of Chery, Geely, SAIC, Changan, Great Wall, BYD and other domestic manufacturers significantly. A minority of 8 percent worry that any policies promoting the number of own brand vehicles in government use would harm foreign joint ventures, while 12 percent believed that there would be very little effect on the overall market.

The final question dealt with what ways the government should implement to increase the number of own brand vehicles used. A majority of 58 percent of respondents believed that ordering bodies to first select own brand vehicles would be the most effective method. 24 percent maintained that government should put out purchase policies favoring own brand cars, while 7 percent believed that the best way is for the government to directly provide economic subsidies. 

The government must not only voice its support for the development of the own brand industry, but also make real efforts to show that it is doing its part. Using own brand vehicles as government cars is an excellent way to go about that. By approving vehicles for official use, the government helps endow the automobile with a certain sense of class and grandeur that becomes especially attractive to the ordinary consumer.