By Kate Yuan

(JW Insights) Mar 7 -- Government in central China’s Hubei Province has joined hands with carmaker Dongfeng Motor to offer up to RMB90,000 ($12,915) subsidy on cars purchased locally to boost consumption, JW Insights learned.

Fifty-eight models from seven brands under Dongfeng Motor joined this price cut including Citroen, Peugeot, Nissan, Honda, Voyah, Aeolus, Dongfeng and Fukang, and the subsidy ranges from RMB5,000 ($717) to RMB90,000.

Dongfeng Citroen C6, priced at RMB211,900 ($30,386) originally, had the biggest discount and needed only RMB121,900 ($17,480). Many Dongfeng dealership stores were overcrowded and received soaring orders. Even on weekdays, there were still nearly 40 people to test drive Citroen.

The subsidy policy requires a vehicle to be bought and registered in Hubei where Dongfeng Motor is based in the period of March 1 to 31. Then the 4S store and local government will refund the subsidy amount to the buyer’s bank account within 15 working days, said a Yicai Global report.

On February 5 this year, Hubei’s capital Wuhan City issued auto consumption promotion policies, and encouraged some districts in Wuhan to join hands with local carmakers and dealerships to launch car purchase subsidy activities.

Hubei is a latecomer, though. At least 15 other local governments have earlier rolled out similar incentives to fire up sales, said an SCMP report.

"In addition to stimulating local car consumption, the subsidy policies also aim to help Dongfeng boost sales," an industry insider said, "In the first two months of this year, many car brands under Dongfeng have not been able to reverse the downward trend.”

In 2022, Dongfeng Group, the largest car company in Hubei, sold 2.4645 million vehicles, down 11.19% over the previous year. In January 2023, its car sales slumped by 64.4%, reaching 108,088, according to its announcement on the Hong Kong Stock Exchange.