Exclude JV cars from government procurement

　　Most joint venture cars will be probably excluded from the government purchase list.

　　According to the time weekly, a draft plan on the new criteria of procurement of official cars will come out soon, which concerns all automakers. “Besides the proportion of home-grown brands may make up at least 50%, the criteria of government purchase will be lowered significantly------“Ministerial level officials should have cars with an engine up to 2.5 liters and a price below 350,000 Yuan. For a vice-ministerial level official, the car should be priced below 300,000 Yuan with an engine smaller than 2.5 liters. And other cars should be less than 160,000 Yuan with engines smaller than 1.8 liters”. The draft plan, already been through a great number of state ministries and commission’s examination and approval, is expected to be released in the near future, according to sources. “New criteria will exclude most joint venture cars from the government purchase list. Although some car models quite meet the purchase criteria, they are more like family models judging by appearance, but not official cars.” The above news has been confirmed by a staff member, who works at procurement department directly under the jurisdiction of central government.

　　As the biggest item on the government’s procurement list, about 80 billion Yuan has been spent on vehicle purchases in 2008, accounting for 20% of government procurement for the whole year, according to statistics released by China Machinery Industry Federation. Foreign automakers are drooling over such a biggest government procurement program of vehicles, which exists in no other country, but China. “As long as the government lowers the purchase criteria of official cars, joint venture brands will lose their enthusiasm for bidding.” Xue xu, professor from school of economics of Peking University has said so. The upcoming policy will make those foreign automaker giants suppress their ambitions for dominating China official cars market.

　　According to sources, “new criteria of common official cars have been executed under the procurement system of departments, which is directly under the jurisdiction of the central government. Once the new policy has been implemented, local authorities will have to follow the same criteria”. A person from some local authority, who is in charge of procurement and bidding program, has told reporters that the proportion of joint venture cars will be reduced significantly in government procurement list.

　　It’s worthy of celebrating the most for indigenous automakers that the proportion of home-grown brands may make up at least 50% of new purchases of government-owned cars, as required by the new policy for government procurement of official cars. According to Dong yang, secretary general of China Automobile Industry Association, compared with vehicle sales promotion, the demonstration effect of official cars will be way much more significant. Definitely, it will boost indigenous automakers to intensify independent development and research, bring along China automobile industry. As a matter of fact, complete-vehicle automakers are not the only one benefiting from the promotion of home-grown brands. “There is a real issue in procurement of automobile parts. Joint ventures are purchasing components and parts from joint ventures or exclusively foreign-owned companies, while independent automakers are purchasing them from indigenous companies. Thus, the development of independent brands will stimulate the growth of whole industry chain” said Xu Changming, director of resource department of national information center. (Translator: qinghua/serena)

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　　http://auto.sohu.com/20100226/n270439015.shtml