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Introduction

With the introduction of car purchase subsidy policies, is it inevitable that the automotive market will grow next year?

In 2025, the Chinese automotive market experienced a remarkable year driven by strong national subsidy policies. Data shows that from January to November this year, the total number of vehicles traded in nationwide exceeded 11.2 million. The policy "red packet rain" effectively nurtured the prosperity of the automotive market, driving related consumption exceeding 2.5 trillion yuan and benefiting over 360 million people.

The trade-in policy directly drove the growth of automobile consumption. In the first 11 months of 2025, domestic automobile sales increased by 11.4% year-on-year, with new energy vehicles (NEVs) performing outstandingly, reaching sales of 14.78 million units, a year-on-year increase of 31.2%. The policy scale is estimated to exceed 180 billion yuan, and combined with measures such as NEV purchase tax exemptions, it provides strong support for the market.

However, as December approached, with the gradual depletion of annual subsidy quotas and the emergence of consumer wait-and-see sentiment, signs of sluggish growth began to appear quietly in the terminal market. The industry generally felt a chill before the "policy lull period."

Just as major automakers were preparing for New Year's Day promotions and the market was eagerly anticipating new policy guidance, on December 30, the "2026 Implementation Rules for Subsidies on Automobile Trade-ins" jointly issued by seven departments, including the Ministry of Finance and the Ministry of Commerce, came like a "timely rain," precisely irrigating the somewhat anxious automotive market at the end of the year.

Upon closer inspection, this new policy, which made its debut amidst great anticipation, makes adjustments in multiple aspects such as subsidy scope, subsidy standards, and implementation mechanisms. It not only continues the subsidy efforts but also makes significant optimizations in orientation and mechanisms, ushering the automobile consumption promotion policy into a new stage of more precise policy implementation and high-quality development.

Based on the continuation and optimization of subsidies, the industry generally believes that the new policy will effectively stabilize fluctuations during traditional off-seasons and inject a strong boost into the steady start of the automotive market in 2026.

01 Seamless subsidy transition, more precise and reasonable

On December 30, the National Development and Reform Commission and the Ministry of Finance issued a notice on the implementation of large-scale equipment updates and consumer goods trade-in policies in 2026 (referred to as the "Notice"). The Notice mentions automobiles multiple times, with significant attention given to updates in the national subsidy policies for automobiles.

Overall, the core of the 2026 automobile trade-in subsidy policy lies in three dimensions: continuing the total subsidy amount, optimizing the subsidy structure, and strengthening full-process supervision. Its specific rules also exhibit very distinct characteristics.

Firstly, the new policy introduces for the first time a differentiated subsidy calculation method linked to the price of new vehicles, aiming to encourage mid- to high-end consumption and promote the value enhancement of the automobile industry.

When scrapping old vehicles to purchase new ones, new energy passenger vehicles receive a subsidy of 12% of the new vehicle price, with a maximum cap of 20,000 yuan. This means that if the purchase price reaches or exceeds 166,700 yuan, one can enjoy the full 20,000 yuan subsidy. For fuel-powered vehicles with a displacement of 2.0 liters or below, the subsidy is 10% of the new vehicle price, with a maximum cap of 15,000 yuan. If the purchase price reaches or exceeds 150,000 yuan, one can receive the full 15,000 yuan subsidy.

When transferring ownership of old vehicles to purchase new ones, new energy passenger vehicles receive a subsidy of 8% of the new vehicle price, with a maximum cap of 15,000 yuan. The purchase price needs to reach 187,500 yuan or above to enjoy the maximum subsidy. For fuel-powered vehicles with a displacement of 2.0 liters or below, the subsidy is 6% of the new vehicle price, with a maximum cap of 13,000 yuan. The purchase price threshold is set at 216,700 yuan.

It is not difficult to see that compared to the fixed-amount or proportional subsidies of 2025, which adopted a "one-size-fits-all" approach, the 2026 new policy achieves a combination of "inclusiveness" and "guidance" by setting subsidy caps and implicit price thresholds.

On the one hand, all eligible consumers can still enjoy tangible subsidies. On the other hand, policy resources are more inclined to encourage consumers to choose models with higher values. This directly addresses the structural issue of "a surge in sales of low-priced vehicles but sluggish growth in industry profits" that emerged in 2025, aiming to drive the automotive market from quantitative expansion to qualitative improvement. This is more advantageous for brands with dense layouts of mid- to high-end models and high technological added value in their product lines.

Additionally, the new policy places special emphasis on "optimizing fund allocation methods and improving full-chain implementation rules" and explicitly proposes to "crack down severely on illegal and violation behaviors such as fraudulently obtaining subsidies and 'price hikes before subsidies.'"

In response to potential behaviors by dealers in previous years, such as temporarily raising prices before policy implementation to dilute subsidy benefits (i.e., "price hikes before subsidies"), the new policy will curb such behaviors through measures such as strengthening price monitoring, clarifying reference benchmark prices, and establishing reporting and verification mechanisms.

At the same time, according to previous reports, behaviors such as "scalpers" snatching subsidies on behalf of others and illegally obtaining subsidies will also be strictly investigated. It is expected that technical and administrative means, such as strengthening the verification of the authenticity of vehicle owner identities and vehicle information, utilizing big data cross-comparisons, and establishing integrity blacklists, will be employed to ensure that subsidies truly benefit genuine consumers. Once identified as scalpers snatching subsidies on behalf of others, not only will the current subsidy eligibility be canceled, but they will also be included in the government's dishonesty list and will not be eligible for any preferential subsidies for three years.

Meanwhile, optimizing fund allocation may imply a more efficient review and disbursement process, as well as more precise allocation towards regions with active consumption and key promotion models, ensuring that "good steel is used on the blade."

Despite more refined orientation, the overall financial support for national subsidies in 2026 has not weakened. Notably, to seize the traditional consumption peak seasons of New Year's Day and Spring Festival, the country has already allocated the first batch of 62.5 billion yuan in ultra-long-term special treasury bonds to localities in advance to support the trade-in program.

This means that starting from January 1, 2026, consumers can enjoy the new subsidies after completing relevant procedures, achieving a "seamless transition" of policies. This move will greatly stabilize market confidence, effectively avoid consumer wait-and-see sentiment and severe market fluctuations in the first quarter caused by policy switches, and help the automotive market achieve a "successful start" in 2026.

02 Subsidies drive growth, is the automotive market stable next year?

The introduction of the new policy in 2026 is built on the solid foundation of significant achievements made by the "national subsidies" over the past two years. Looking back at 2024 and 2025, the trade-in policy has become a key engine for driving automobile consumption and promoting industrial upgrading.

In 2024, the country issued 150 billion yuan in ultra-long-term special treasury bonds for the first time, specifically for consumer goods trade-ins, with automobiles being a top priority. This policy, known as the "national subsidy," quickly ignited market enthusiasm upon its launch. It directly reduced the cost of car replacements for consumers, especially owners of old vehicles, effectively releasing suppressed upgrade demands. It provided decisive support for the stable growth of the automotive market that year and accumulated valuable experience for subsequent policy optimizations.

Given the successful practice in 2024, the country decisively increased its investment in 2025, doubling the national subsidy quota to 300 billion yuan. The unprecedented policy intensity created a "red packet rain" effect, having a more significant catalytic effect on the automotive market.

With the strengthening of national subsidies, from January to November this year, over 11.2 million vehicles were traded in, a milestone figure indicating that the policy has deeply penetrated the market and reached a vast number of vehicle owners. Meanwhile, national subsidies have not only directly promoted automobile sales but also, through industrial chains, driven consumption of related goods and services exceeding 2.5 trillion yuan, benefiting over 360 million people, highlighting the pivotal role of automobile consumption in the macroeconomy.

At the same time, driven by policies, the proportion of trade-ins for new energy vehicles has continued to rise, accelerating the replacement of the existing fuel vehicle market and the green transformation of the entire transportation system.

The two years of practice have fully proven that "trade-in" subsidies are an excellent policy tool that directly reaches demand, yields rapid results, and has a significant multiplier effect. It not only stimulates consumption and promotes circulation at the economic level but also assists in energy conservation, emission reduction, and traffic safety improvements at the social level. More importantly, it accelerates technological progress and capacity optimization at the industrial level.

Therefore, standing on the shoulders of the high base of the previous two years, the 2026 national subsidy policy shoulders a new mission. It is no longer simply about stimulating sales but precisely guiding structural adjustments and quality improvements. Through differentiated subsidy designs, the policy signal is crystal clear: encouraging consumers to pursue higher-quality, higher-technology automobiles and driving automakers to shift their competition focus from price wars to value wars.

With the early arrival of the first batch of 62.5 billion yuan in funds and the simultaneous implementation of strict regulatory measures, a more standardized, transparent, and efficient subsidy implementation environment is taking shape. It is foreseeable that the Chinese automotive market in 2026, under the protection of the new national subsidy policy, will bid farewell to drastic fluctuations and move towards a prosperous scenario characterized by technological upgrades, brand advancement, and consumption quality improvements.

A new round of development cycles for the automotive market has quietly begun with the release of the new policy.

Editor-in-Chief: Cao Jiadong Editor: He Zengrong

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