China braces for domestic cars boom

More than 10 provincial and central governments in China have placed orders for cars of domestic brands, Xinhua News Agency reported on Wednesday.

Industry insiders took the move as a sign that more local governments will buy domestic cars instead of foreign brands, and help boost the development of domestic brands.

Xu Xianping, general manager of the First Automobile Works Group, said that one of its models, the Hongqi H7, received an initial order of 13 cars from the Jilin provincial government in February.

Apart from Jilin province, Xu said, a dozen other provincial and central governments have also placed orders for the sedan.

The Hongqi H7 is not the only sought-after model by government agencies. Last year, the Fujian provincial government bought 72 Besturn B90 sedans, another model made by FAW, Xinhua quoted Cui Dayong, a senior sales manager at FAW, as saying.

Other domestic brands, such as the Trumpchi owned by the Guangzhou Automobile Group and the Roewe 950 of the Shanghai Automotive Industry Co, have also made their way into the official vehicle market in the provinces of Guangdong, Zhejiang, Jiangsu and Shandong.

And Chinese domestic brands are expected to gain a bigger share of the government's procurement orders for cars, after policies on government vehicle procurement have encouraged the purchase of domestic cars, industry insiders said.

In February 2012, the Ministry of Industry and Information Technology issued a list of 412 models, from which government and party agencies are required to choose the cars for official use. Chinese brands make up the majority of the list.

Foreign brands, such as Audi, Volkswagen and Toyota, which had been included in a similar list in 2009, are not in the recent catalogue.

Previously, many government cars were made by foreign brands such as Audi, and joint venture brands. Insiders added that it is still not easy to break the monopoly of joint venture brands in the official car sector.