Chinese consumers in 13 cities will receive a financial subsidy if they buy energy-saving and new energy cars while public service sectors are expected to play a key role as China launched projects to promote greener vehicles.

The central government has called on local authorities in cities such as Beijing and Shanghai to offer one-time subsidies to auto buyers for them to purchase fuel efficient cars, the Ministry of Finance said in a statement posted on its website. But no details on the subsidies were released. Greener vehicles will include hybrid cars, electric cars and fuel cell vehicles.

The public service sectors, including transport, taxi, postal and urban environmental sanitation, will be asked to use fuel-efficient and alternative vehicles, the statement added.

Other cities which will be involved in the projects are Chongqing, Changchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei, Changsha, Kunming and Nanchang.

China is keen to encourage the use and manufacture of new energy vehicles as its fast growing vehicle population is putting high pressure on environment protection and energy-saving targets. The central government pledged to provide 10 billion yuan (US$1.46 billion) in the next three years to auto makers to help upgrade their technology and develop alternative energy vehicles.

Oversea car makers, including Toyota Motor Corp and General Motors Corp, and domestic players such as Chang'an Motor Group and BYD Automobile Co have launched fuel-saving vehicles after heavy research and development spending.

A total of seven Chinese-made new energy vehicles have been granted production permits, including Toyota's Prius hybrid, Chang'an Jie Xun hybrid and BYD's F3DM electric hybrid.

But analysts said it will take time for sales of new energy vehicles to pick up due to still high car prices.

(Shanghai Daily February 2, 2009)