Car Sales in China Rebound as Free-Car Plan for Officials Ends

Retail car sales in China are climbing as civil servants face the end of government-supplied vehicles, The Nikkei reports.

The policy, which was announced in July, will phase out free cars for central government officials below the rank of deputy minister by year-end. The official will instead receive monthly transportation stipends of 500-1,300 yuan ($82-$212), depending upon their rank.

A similar plan will go into effect for provincial officials at the end of 2015. Beijing has estimated the policy could generate at least 1 million in additional retail car sales.

Analysts say the policy shift presents an opportunity for China's domestic brands, especially since new regulations limit the price of official government vehicles to 180,000 yuan ($29,400).

But observers note that officials accustomed to what they consider higher-quality European and Japanese brands are likely to remain loyal to those marques. The government policy does not require bureaucrats to buy domestic brands.