China shuts door on foreign cars

2012-02-28 08:16

BEIJING, China - Chinese automaker shares rose, led by Dongfeng Automobile and FAW Car, after the government excluded foreign brands from a preliminary purchase list of official vehicles.

Dongfeng Automobile jumped 10%, the first time it climbed by the daily limit since November 2009, FAW gained 4.9% and Great Wall Motors 3.6%.

All 412 models approved for state purchase in 2012 will be limited to Chinese brands. The move will help local brands gain in the government fleet's R95.9-billion market at the expense of foreign brands such as VW, GM and Toyota, China International Capital Corporation said in a report.


Analysts reported:"This signals strong government determination to cultivate China's own auto industry. State support of local brands is greater than expected," analysts reported.

Foreign brands accounted for about 80% of the official pool, according to Guotai Junan Securities. In the broader market, they account for seven of every 10 cars sold in the country, which overtook the US in 2009 to become the world's largest vehicle market.

China spent the equivalent of R95.9-billion on state vehicles in 2010, 4.5% of total passenger-vehicle sales. Officials said the state operated a fleet of at least 5.2-million vehicles as of November 2007 - more than the total number of cars sold in Japan in 2011.

Janet Lewis, Lin Zhixuan and Aaron Qi analysts at Macquarie Group said: "Most countries use official cars as a way to showcase the domestic auto industry, so we see this as a natural progression of the development of China's automotive industry."

  • Thando - 2012-02-28 12:20

    Yeah , we must buy their products but they won't buy our products ? I heard any car company has to do a joint venture with a local company or will not be allowed into their market. Maybe we should kick them out of Africa ?

  • James - 2012-02-28 13:25

    Africa will find out very soon that the Chinese are ruthless.

      Shaun - 2012-02-28 19:45

      The Chinese are still in the very early stages of "quietly robbing Africa"! - Cheers

  • Barry - 2012-02-28 15:21

    The headline is misleading. They are just buying local cars for the government fleets instead of foreign cars.

  • Peter - 2012-02-28 20:39

    R95 Billion on government cars must surely still be short of what our clowns spend here! ;)

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