The 2026 Spring Festival auto market has an extra touch of warmth from 'policy red envelopes.' While everyone was busy preparing for the holiday and traveling, the Ministry of Commerce and eight other departments quietly ignited consumer enthusiasm by implementing vehicle trade-in subsidy rules two months early. Unlike the universal subsidy approach in 2025, this year’s policy is marked by 'early launch, reduced average subsidy, and enhanced precision.' Subsidies of up to RMB 20,000 in Shanghai, Jiangxi, and other regions, combined with exclusive new year discounts from automakers, have prompted many families to prioritize 'upgrading to a new car' during the Spring Festival. This convergence of policy and holiday consumption has not only delivered a 'strong start' for the Spring Festival auto market but has also carried momentum into the post-holiday period. New energy and high-end models have emerged as the biggest winners, while county-level markets have become a new blue ocean for growth.

▍Early Launch + Differentiation: Igniting Spring Festival Consumption

The most noticeable change in the 2026 vehicle trade-in policy is its 'early arrival and detailed segmentation.' As early as December 30, 2025, the national implementation rules were officially released, with full execution starting January 1, 2026—three months earlier than in 2025—perfectly aligning with the peak Spring Festival car-buying season. For consumers, this means they can confidently purchase vehicles without waiting for policy implementation, and subsidies can be claimed normally for orders placed during the Spring Festival holiday. The Ministry of Commerce specifically clarified this point, reassuring many on-the-fence buyers. Compared to 2025, the biggest policy shift is the transition from fixed subsidy amounts to calculations based on a percentage of the new vehicle’s price. While the overall average subsidy has decreased by 30%, targeting has significantly improved, ensuring 'resources are used where they matter most.'

The policy’s core framework retains the dual-track system of 'scrappage renewal' and 'trade-in renewal,' but shifts subsidies from fixed amounts in 2025 to percentage-based calculations. Specifically, models with an invoice price exceeding RMB 188,000 are eligible for a RMB 15,000 trade-in subsidy. Scrapping eligible old vehicles for new energy passenger cars offers a 12% subsidy (up to RMB 20,000), while trade-ins receive an 8% subsidy (up to RMB 15,000). Fuel vehicle subsidies are limited to models with 2.0-liter engines or lower, clearly favoring green and low-carbon vehicles.

Regional differentiation under the national framework further enhances policy precision. Shanghai, a major auto consumption hub, strictly defines scrappage timelines, offering top subsidies for gasoline vehicles registered before June 30, 2013, and diesel vehicles before June 30, 2015, precisely targeting high-emission old vehicles. Meanwhile, central and western provinces like Jiangxi and Hunan focus on activating sink markets (lower-tier markets), simplifying application processes for rural consumers and supporting township used car outlets to handle submissions, ensuring owners in remote areas can easily access policy benefits.

However, policy implementation requires attention to detail. For example, old vehicles must be registered under the applicant’s name before January 8, 2025, and the new vehicle’s invoice and registration must be in the same province. Each individual is limited to one subsidy, and scrappage and trade-in subsidies cannot be combined. Some regions operate on a 'first-come, first-served' basis, with cases like Xuzhou, Jiangsu, seeing subsidy quotas exhausted early. Industry insiders advise acting promptly, as early applications benefit from ample quotas and smooth processes, avoiding year-end rushes and last year’s subsidy gaps.

To address issues like uneven 2025 subsidy distribution and fraud, the 2026 policy strengthens oversight through big data vehicle information matching and real-name authentication, safeguarding funds and ensuring genuine car replacement needs are met. The activation effect is evident: Ministry of Commerce data shows 612,000 vehicle trade-ins nationwide by February 19, driving over RMB 100.5 billion in new car sales. Daily new energy vehicle sales during the Spring Festival holiday peaked at 36,000 units, up 150% year-on-year, with trade-in orders accounting for over 65%.

Notably, February 2026 saw the domestic auto market undergo a 'stress test' due to the 'longest-ever Spring Festival holiday.' With only 16 effective workdays and pre-holiday demand already released, most automakers experienced significant month-on-month sales declines compared to January 2026. However, as workers return post-holiday and regional spring auto shows launch, terminal customer traffic and sales are expected to rebound in March.

▍Subsidies and Automaker Synergy: Post-'Spring Fever' Market Differentiation

In response to the early subsidy rollout, automakers swiftly adjusted their new year promotion strategies, forming a four-dimensional collaborative system of 'policy subsidies + automaker discounts + financial support + service upgrades,' amplifying Spring Festival market enthusiasm that persisted post-holiday, fueling structural market differentiation.

During the Spring Festival, domestic high-end new energy brands and joint-venture luxury brands launched 'maximum subsidies + cash discounts' combinations, maximizing policy benefits. Hongmeng Intelligent Automotive offered cash discounts and intelligent driving credit packages for the AITO M9, superposition (stacked with) trade-in subsidies, prompting many consumers to place orders. Traditional luxury brands also lowered their profiles, with BMW’s 7 Series seeing maximum comprehensive price reductions of RMB 270,000, Mercedes-Benz E-Class discounts exceeding RMB 130,000, and Audi A7L offers nearing RMB 190,000. Subsidy policies became key to their 'destocking' efforts. Domestic brands better understood county-level market demands, with BYD, Geely, and Changan offering 'maximum subsidies + RMB 10,000–20,000 cash discounts' for their 100,000–150,000 yuan mainstay models, plus additional trade-in subsidies for existing owners, effectively activating replacement demand. Chery’s New Year Renewal Season covered both fuel and electric models across multiple series, attracting consumers with substantial discounts.

Beyond direct discounts, automakers invested in financial support and service upgrades. IM Motors introduced '7-year zero-interest' and '3-year zero-interest' financial plans to ease consumer financial pressure. Many automakers partnered with used car platforms to offer 'residual value guarantee services,' allowing consumers to directly offset new car payments with old vehicle residual values, enabling one-stop 'old car disposal + new car purchase.' Lynk & Co provided existing owners of the 2025 Lynk & Co 08 an extra RMB 5,000 subsidy for upgrading to new models, along with free OTA system upgrades to enhance user loyalty. Joint-venture brands like Volkswagen and Toyota offered 20% higher subsidies for fuel vehicle owners trading in for brand-specific new energy models, aiming to offset new energy market shortcomings through existing user conversion.

Post-holiday, the auto market avoided the usual 'post-festival slump,' instead showing clear structural differentiation. First-tier cities maintained 'high-end replacement' momentum, with many consumers finalizing Spring Festival viewing decisions post-holiday, driving sustained orders for traditional fuel luxury cars replaced by domestic high-end new energy models. A sales manager at a Beijing high-end new energy brand noted that orders in the first post-holiday week slightly exceeded pre-holiday levels, mostly from trade-in customers. In second- and third-tier cities and county-level markets, new energy vehicle adoption accelerated, with 100,000–150,000 yuan new energy models remaining the consumption mainstay. Subsidy policies alleviated budget constraints, while expanded charging infrastructure eased range anxiety, continuously improve (continuously boosting) new energy vehicle penetration in county-level markets.

This differentiation reflects consumption structure upgrades driven by policy and market forces. Data from the China Automobile Dealers Association shows that while the February dealer inventory alert index remained above the threshold, it Month on month decline (month-on-month decreased) by 3.2 percentage points, indicating that Spring Festival sales effectively eased dealer inventory pressures. To sustain this momentum, automakers launched post-holiday continuation policies: Tesla China extended its '7-year ultra-low-interest' loan program, Leapmotor introduced a new purchase policy on March 1, adding a full purchase tax coverage policy to its 7-year ultra-low-interest financial plan, with battery leasing purchases eligible for full purchase tax subsidies. SAIC-GM Buick announced 'RMB 10 billion red envelope' new year benefits, with direct price reductions on multiple models and RMB 1,000 arrive 5,000 (RMB 1,000 securing RMB 5,000 worth) of deposit expansion via Tmall or Douyin orders. BYD continued its trade-in subsidies, sustaining consumer purchasing enthusiasm.

Long-term, the 2026 trade-in policy is driving sustained increases in new energy vehicle penetration, with the China Association of Automobile Manufacturers projecting a breakthrough to over 55% this year, up more than 5 percentage points from 2025. The policy’s 'precision' adjustments lay the groundwork for future subsidy phase-outs, with post-2027 subsidies likely to further favor 'high-range, high-intelligence, low-energy' models, while market-driven demand takes the lead.

As old fuel vehicle inventories dwindle and new energy vehicle ownership surges, supporting ecosystems for charging, maintenance, and used cars will increasingly mature, forming a virtuous cycle of 'market demand driving industrial development, which in turn supports market demand.' By 2028, new energy vehicle penetration could exceed 65%, with long-term policies pushing automakers to intensify R&D in high-end and intelligent technologies. Domestic high-end new energy brands are poised to surpass traditional luxury brands in core technologies, while improving the new energy used car circulation system to address 'low residual value' pain points, propelling the industry into a new phase of high-quality development.

Layout 丨 Yang Shuo Image Source: Qianku.com