With economic growth beginning to slow across the globe, stimulus measures are once again back on the table. From quantitative easing programs in the U.S. to the LTRO measures in Europe, analysts expect another round of the plans to be on the horizon. Emerging market leader China has been the first to fire a small salvo at boosting its dwindling GDP growth. Beijing recently announced a subsidy program devoted to energy-efficient products. While the program covers everything from LED lighting to washing machines, the real driver could be the billions allocated towards boosting automobile demand. Already a key driver for vehicle growth, the additional stimulus measures could see the Asian Dragon's demand roar once again. For investors, that rising demand leads to opportunities.

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China's Cash for Clunkers
Coming off the back of its worst four-month slump in over 14 years, China has recently announced some new measures to increase automobile demand across the nation. While the main purpose of the 26.5 billion yuan subsidy program is designed for energy-efficient products, including high efficiency hot-water heaters and air conditioners, more than 6 billion yuan has been set aside for fuel-efficient cars. Following America's "Cash for Clunkers" style program, Beijing hopes to drum up industrial activity as well as continue with its goal of shifting the Chinese economy from one of export to one of domestic consumption. This is in addition to a $946 million subsidy program for purchases of vehicles with engines smaller than 1.6 liters, as well as cuts to gasoline prices.

SEE: Government Subsidies For Business

While there is much debate over whether the Cash for Clunkers program has worked in the U.S., China has had success with implementing these stimulus measures. During the throes of the Credit Crisis and Great Recession, China's last automobile stimulus measure produced a tremendous year-over-year gain in production. Overall, production of cars rose more than 120% at its peak.

These sorts of programs have many automakers and analysts now predicting an auto rebound for China. Investment bank Morgan Stanley (NYSE:MS) views the program as encouraging and will have a "positive influence on car demand." At the same time, industry stalwart GM (NYSE:GM) is predicting that the plan will "get them back into the buying mode."

SEE: Taking Another Look At Auto Stocks

Betting on China's Rising Auto Market
Analysts at ISI estimate that between 22 and 30 million cars will be sold each year in China, over the next three years. These stimulus measures and subsidies will certainly help see to that. To that end, investors may want to consider betting on rising Chinese auto demand. Both the Global X Auto ETF (ARCA:VROM) and First Trust NASDAQ Global Auto Index (NASDAQ:CARZ) can be used as broad bets on rising automobile demand. The two ETFs are virtually identical, with large weightings in Toyota (NYSE:TM), Ford (NYSE:F) and Hyundai in the top holdings. However, both funds hardly have any assets under management or liquidity.

A better bet might exist in China's brand-consciousness. That focus on "status" is resulting in a surge of luxury car buying. In 2011, luxury brands grew from 5% of the market to 7.3%, exceeding 1.1 million units annually. Additionally, SUV sales continue to rise and now capture 13% of the Chinese market. These trends have benefited those producers with strong luxury brands. Bayerische Motoren Werke (OTCBB:BAMXY) through its BMW and Rolls-Royce vehicles has grown its sales more than 36% year-over-year in China. Likewise, Volkswagen (OTCBB:VLKAY), through its Audi marquee has similar high year-over-year sales growth. Both automakers, along with India's Tata Motors (NYSE:TTM), could make great choices to play China's market. Sales in China of the firm's Jaguar and Range Rover brands now account for about 17.2% of the group's revenue.

SEE: 9 cars That Can Rebuild The American Auto Industry

The Bottom Line
With its growth stalling, China has recently begun plans for new stimulus measures. The first of which has been a program to spur domestic automobile demand. The subsidy measures will ultimately help push forward sagging sales and boost gains for automakers. The previous luxury picks, along with Daimler (OTCBB:DDAIF), make ideals elections to play the rebound.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.

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