Year of Horsepower: Car industry shifts gears

Reforms target use of government vehicles

The year 2013 saw two major reforms that affected the use of government and military fleets.

On Nov 25, a regulation against waste in Party and government offices was released, stipulating that only leaders at and above deputy-governor levels can be equipped with official vehicles. Also officials at the deputy governor level will not be granted public vehicles after retirement.

Industry insiders said this is the country's strictest regulation against the abuse of government vehicles.

They said this significant reform would help build cleaner governments as well as reduce public spending.

Independent auto analyst Jia Xinguang said the reform will not have a major impact on the passenger vehicle market.

He said annual purchases of government vehicles are expected to decrease by 300,000 units, but the cut only accounts for 2 percent of China's entire passenger vehicle market, which is projected to have annual sales of 16 million units.

Analysts are also predicting that a policy requiring the army to procure cars from domestically developed brands will be a boon for the national industry.

They said the practice may spread to more Party and government offices.

Such reforms are likely to influence some foreign automakers that mainly focus on China's government vehicle market, said analysts, adding that joint ventures will develop more local brands to adjust to the market change.