Editor's Note

Recently, the national and local governments have successively issued policies for car trade-ins, and car companies have also followed suit, sharing the benefits of policy packages. Under the guidance of the government and with the market as the mainstay, the car trade-in initiative, supported by policy synergy, will greatly unleash the potential of car consumption, promote the qualitative upgrading of the automotive industry, and have a profound impact on the new round of development of the automotive industry. Focusing on this round of trade-ins, "Auto Review" has specially prepared this special report on the "Cover Story". This special report consists of 5 articles, with the second article being released today. Please stay tuned.

Recently, a nationwide upsurge of "trade-in" activities has emerged, aiming to promote the elimination of old cars and consumption of new cars. Reporters from "Auto Review" have conducted a comprehensive review of a series of car trade-in policies issued by various localities recently, for industry reference.

On April 26, the Ministry of Commerce, Ministry of Finance, and other six ministries and commissions jointly issued the "Detailed Rules for the Implementation of Subsidies for Car Trade-ins" (hereinafter referred to as the "Detailed Rules"), clarifying the scope and subsidy policies for car trade-ins. With the strong promotion of national policies, localities across the country have responded quickly. According to incomplete statistics from reporters of "Auto Review," as of late May, 30 provinces, cities, and regions across the country have launched relevant implementation plans and preferential policies, benefiting a wide range of consumers. It should be noted that the subsidies mentioned in the "Detailed Rules" belong to national fiscal expenditures, so they can be enjoyed in addition to local fiscal subsidies and corporate discounts, which is one of the reasons why reporters reviewed policies across the country this time. At the same time, during the process of reviewing relevant policies across the country, reporters from "Auto Review" found that this round of trade-in policies significantly favors new energy vehicles, and the subsidy strength has reached a new high, which is expected to leverage a trillion-level market. This article summarizes the key points of relevant policies for industry reference.

Huge scale, new energy vehicles enjoy the greatest benefits

Currently, it has been nearly 15 years since the last round of promoting nationwide car trade-ins. According to calculations based on the service life of household cars, the demand for renewal has also entered a period of concentrated release this year. After summarizing, it is found that this round of trade-in activities is huge in scale, and the subsidy strength is also unprecedented. Consumers trading in for new energy vehicles can generally enjoy the highest discounts. Taking Shanghai as an example, according to relevant rules, individual consumers who purchase new energy vehicles and scrap or transfer their old cars before December 31, 2024 can enjoy a one-time subsidy of 10,000 yuan provided by Shanghai, as long as they meet the relevant regulations. However, for consumers trading in non-commercial fuel-powered small passenger cars that meet the National V emission standard or below, the relevant subsidy amount is only 2,800 yuan. In other provinces, cities, and autonomous regions, the situation is mostly similar, with most first-tier, second-tier, and even third-tier and fourth-tier cities introducing corresponding car purchase discount activities.

At the same time, promotional activities such as taking new energy vehicles to rural areas have also been included in the local "Implementation Plan for Promoting Large-scale Equipment Updates and Trade-ins of Consumer Goods" by Shandong, Yunnan, Ningxia, and other provinces, cities, and autonomous regions, which is expected to further increase the promotion of trade-in subsidy policies. In addition, accelerating the construction of charging and battery swapping infrastructure supporting new energy vehicles has also been included in the plans of many localities during this initiative. Among them, Jiangsu Province proposed to include charging (swapping) facility land into the scope of public utility business outlets; Jiangxi Province plans to guide charging pile infrastructure operators to appropriately reduce charging service fees; Hainan Province plans to speed up the improvement of a unified Hainan Province charging and swapping network service and regulatory platform; Anhui Province plans to complete the construction of 50 demonstration battery swapping stations in 2024 and plans to establish the Anhui Province New Energy Vehicle Battery Swapping Industry Association to promote the unification of battery swapping standards and carry out pilot demonstrations of vehicle-grid interaction. Such measures can not only effectively increase the coverage of charging (swapping) facilities, solve the problem of electric vehicle charging, and cultivate a good new energy vehicle application environment, but also help improve the public service level of various provinces, cities, and autonomous regions across the country, achieving the goals of steady growth, structural adjustment, and benefiting the people.

Unprecedented strength, subsidies are all "real money"

Looking at policies across the country, it is not difficult to find that most of these subsidies are "real money," and consumers can directly enjoy the policy benefits. Taking Shenzhen as an example, individual consumers who transfer their own vehicles in Guangdong and purchase new energy vehicles or fuel vehicles that meet the National VI emission standard in Shenzhen can enjoy a one-time car purchase subsidy. Unlike Shanghai mentioned earlier, the subsidy amount in Shenzhen will be graded according to the consumer's car purchase price. Among them, for cars with a purchase price ranging from 70,000 yuan (inclusive) to 150,000 yuan (exclusive), the subsidy for purchasing new energy vehicles is 3,000 yuan per vehicle, and the subsidy for fuel vehicles is 2,000 yuan per vehicle; for cars with a purchase price ranging from 150,000 yuan (inclusive) to 250,000 yuan (exclusive), the subsidy for purchasing new energy vehicles is 5,000 yuan per vehicle, and the subsidy for fuel vehicles is 4,000 yuan per vehicle; for cars with a purchase price of 250,000 yuan or more, the subsidy for new energy vehicles is 8,000 yuan per vehicle, and the subsidy for fuel vehicles is 7,000 yuan per vehicle.

The price of the above newly purchased vehicles is subject to the tax-inclusive price of the new car sales invoice. At the same time, Beijing's main "Renewal Life Festival" for trade-ins has also gradually kicked off in mid-May this year. Currently, districts such as Daxing, Changping, and Chaoyang have issued car consumption vouchers worth over 10 million yuan. Consumers who purchase cars during the event can enjoy a national maximum subsidy of 10,000 yuan for trade-ins while also enjoying a maximum direct discount of 17,000 yuan for car purchases. The Tibet Autonomous Region provides consumers with a comprehensive consumption subsidy of 3,000 yuan (such as refined oil consumption vouchers or charging cards) and coordinates the use of special funds for promoting consumption in the autonomous region and local (city) supporting funds to provide subsidies ranging from 2,000 yuan to 15,000 yuan for personal consumers replacing and updating second-hand passenger cars and purchasing new passenger cars. In Mianyang, Sichuan Province, consumers who do not meet the national subsidy conditions can obtain a replacement reward of up to 6,000 yuan per vehicle as long as they scrap or transfer their old cars and purchase new cars in Mianyang.

Multiple measures to activate the used car market

On April 12, the Ministry of Commerce and 13 other departments issued the "Action Plan for Promoting Trade-ins of Consumer Goods," deploying trade-ins for cars, requiring a focus on all links in the entire life cycle of cars, including new cars, used cars, scrapped cars, and the automotive aftermarket, to promote car trade-ins across the entire chain. In this round of trade-in initiatives, many localities across the country have also made policy deployments for the used car market, which has actually promoted the promotion efforts of used car dealers to a certain extent. At the local level, Zhejiang has clearly relaxed the access requirements for used car business entities, promoted the establishment of registration service stations in used car trading markets, and proposed that by 2027, the province's used car transactions will grow to more than 1.6 million vehicles, with over 650,000 scrapped and recycled motor vehicles; Hunan mentioned that in 2024, used car transactions will reach 810,000 vehicles, by 2025, 850,000 vehicles, and by 2027, 1.1 million vehicles.

Beijing has introduced reward policies for used car dealerships, giving a reward of 0.5% of the sales amount to enterprises with sales exceeding 5 million yuan, thereby encouraging and promoting the structural optimization and upgrading of the city's existing cars. Chongqing plans to provide a maximum of 2 million yuan in municipal fiscal funds to reward and subsidize car dealerships that have achieved significant results and outstanding contributions in implementing trade-ins for the benefit of the people. Similarly, to provide subsidies for used cars, Guizhou Province provides subsidies to consumers replacing used cars. Guizhou Province proposed in the draft work plan for promoting trade-ins of consumer goods to use provincial fiscal funds to carry out the "Colorful Guizhou Happy Shopping" car replacement promotion, issuing consumption subsidies to consumers through the UnionPay "QuickPass" APP for replacing used cars with used cars. Reporters have noticed that China's used cars have been sold to more than 160 countries and regions around the world, gaining recognition from more and more overseas consumers, and the pace of used cars going overseas is accelerating.

In this trade-in initiative, some localities have also proposed utilizing their location and port advantages to develop used car export business. Among them, Heilongjiang's policies encourage the circulation and trading of used cars, especially mentioning encouraging the export of used cars to Russia to expand the overseas market for used cars; Guangdong's policies mention vigorously developing the export of used cars and encouraging qualified cities to build used car export bases integrating functions such as exhibition and trading, maintenance and preparation, warehousing and logistics, and financial services; Yunnan's policies have "loosened the reins" for used cars going overseas, with the new policy mentioning that enterprises that meet the conditions for national used car export registration should be approved as much as possible, and enterprises that export a certain scale of used cars will be supported in areas such as logistics and transportation, customs declaration and inspection, and overseas exhibitions. Car trade-ins have also received strong support and solid promotion from business associations. Recently, the first stop (Hebei Station) of the practical operation empowerment activity for dealers' "Car Trade-ins" hosted by the China Automobile Dealers Association has kicked off in Shijiazhuang City. The event invited over 100 dealers and brand stores, including the Shijiazhuang Commerce Bureau, well-known dealer groups, automotive aftermarket service companies, and used car businesses, with an unprecedented scale.

Relaxing purchase restrictions, fully unleashing consumption potential

It is worth mentioning that under the guidance of national policies, the purchase restriction policies in many places across the country are also expected to loosen. Among them, Tianjin and Hangzhou will continue to optimize the small passenger car regulation policies. Guangzhou, Shenzhen, and other places are also expected to further relax the restrictions on the number of small passenger car license plates. Among them, the "Shenzhen Action Plan for Promoting Trade-ins of Consumer Goods" issued by the Shenzhen Municipal Commerce Bureau mentions the cancellation of social security restrictions for non-Shenzhen household registration personnel applying for new energy small car increment indicators and relaxing the conditions for individuals with only one small car registered in Shenzhen to apply for hybrid small car increment indicators. Industry analysts believe that the frequent introduction of car trade-in policies in recent years is mainly due to the ongoing transformation and upgrading of the automotive market, with increasing demand for environmental protection, energy conservation, and intelligence. Therefore, encouraging car upgrades and promoting car consumption upgrades have become one of the important directions of policies. The "real money" subsidy policy will effectively stimulate the enthusiasm of enterprises to participate and also stimulate consumers' demand for upgrading consumer goods, thereby accelerating the release of trillion-level market potential.

In fact, the Chinese automotive market has moved from an incremental market to a stock market stage, and this round of trade-ins is also a breakthrough for the automotive market to enter high-quality development. Xu Haidong, Deputy Chief Engineer of the China Association of Automobile Manufacturers, pointed out that the introduction and implementation of this round of trade-in policies reflect the government's dual intentions of promoting environmental protection upgrades and stimulating consumption. "On the one hand, encouraging the elimination of old and high-emission vehicles through subsidies helps reduce environmental pollution, promote green and low-carbon transformation, and is in line with the country's goals of peaking carbon emissions and achieving carbon neutrality. On the other hand, it aims to stimulate car consumption, especially in the current economic environment, directly incentivizing consumers to purchase cars through fiscal subsidies can effectively boost the car market and promote the healthy development of the automotive industry. This shows that the government is actively responding to downward economic pressure, activating domestic demand through precise policies, and unleashing consumption potential," said Xu Haidong.

Note: This article was first published in the "Cover Story" section of the June 2024 issue of "Auto Review" magazine. Please stay tuned. Related reports:

Cover Story (Part One): Car Trade-ins: Unleashing Potential and Improving Quality

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Article: Auto Review

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