According to FT, the trend began sometime last year when cities such as Changzhou and Nanchang began auctioning off their Audis and BMWs in exchange for locally produced cars.
Wenzhou, a south-eastern coastal city, for instance, managed to raise 10.6 million Yuan ($1.7 million) over the weekend by selling off 215 cars that had been designated for official use. Authorities there now claim that they will auction off another 1,300 vehicles – or 80 percent of the municipal fleet – by the end of this year.
Meanwhile, across the country in Yulin, a city in Shaanxi province, authorities raised 5.6 million Yuan in one day by selling off 19 cars – including numerous black Audis and a Toyota Land Cruiser.
The Chinese government spends between 70 billion and 80 billion Yuan ($11.1 billion to $12.7 billion) each year on government-vehicle purchases, said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight, and have been looking to cut down their purchases of “big or extravagant” models in order to save some cash.
In publicising the auctions, the government may also be trying to stave off public anger, ahead of a once-in-a-decade leadership transition, after Chinese citizens published photos of government-owned Porsches and Maseratis online.
However, Professor Tao believes that the changes were “not only about reform,” but due to the fact that “many (cities) are short of money.”
Fiscal revenue growth in China is now nearly 20 percentage points lower than last year. With the city’s risk-taking businesses struggling to pay back debts, the burden has fallen on the local government to turn things around.
Foreign car models also currently account for about 80 percent of the Chinese government’s automobile fleet, with the central government hoping to reverse this trend in the near future.