At the Central Economic Work Conference at the end of last year, "vigorously boosting consumption, improving investment efficiency and comprehensively expanding domestic demand" was listed as the top important task to be prioritized at present. As an important measure to boost consumption and expand domestic demand, the policy of trading in old cars for new ones has played a significant role in promoting the steady growth of the auto consumption market.
According to data from the Ministry of Commerce, in 2024, over 2.9 million vehicles will be scrapped and updated, and over 3.7 million will be replaced and updated, driving auto sales of over 920 billion yuan. Following the remarkable achievements of the trade-in policy in 2024, this year's policy has a broader coverage, earlier implementation and greater intensity. As of April 10, 2025, there were 2.232 million applications for subsidies for trade-in of old vehicles, including 747,000 applications for subsidies for vehicle scrapping and renewal and 1.485 million applications for subsidies for vehicle replacement.
The policy of trading in old vehicles for new ones has played a promoting role in the automotive consumption market, mainly reflected in the increase in the number of scrapped vehicles and the boost in new car sales. Ubs analyzed last year that the sales volume of the domestic auto market mainly came from the replacement of scrapped models. The sales of passenger vehicles in the previous scrapping cycle (2008 to 2010) soared. Calculated based on a 15-year scrapping cycle, the vehicle has now reached its scrapping age. According to relevant department estimates, the market demand brought about by the scrapping and replacement of this batch of old vehicles may reach 8.2 million units.
The introduction of the policy has stimulated consumers' enthusiasm for scrapping old vehicles and purchasing new ones. Jiemian News learned from several car sales outlets that currently about half of the consumers who purchase new energy vehicles do so for replacement. The increased subsidy for replacement can encourage users with the intention to replace to make a decision and quickly carry out the purchase behavior. The general direction of trade-in is to replace a fuel vehicle with a new energy vehicle and a traditional luxury brand fuel vehicle with a high-end new energy brand.
This year, the state continues to allocate 300 billion yuan of ultra-long-term special Treasury bonds to support the trade-in of consumer goods. The actual intensity of the trade-in policy for automobiles has also exceeded market expectations. Previously, the industry generally predicted that the subsidy level per vehicle would be reduced this year.
In 2025, the policy of trading in old vehicles for new ones will continue to implement preferential policies such as tax reduction and exemption for the purchase of new energy vehicles. Moreover, the scope of support for vehicle scrapping and renewal will be expanded, and fuel passenger vehicles that meet the National IV emission standards will be included in the subsidy scope for scrapping and renewal. A subsidy of 20,000 yuan will be provided for scrapping eligible old vehicles and purchasing new energy passenger vehicles. A subsidy of 15,000 yuan will be provided for scrapping the above-mentioned eligible fuel-powered passenger vehicles and purchasing fuel-powered passenger vehicles with an engine displacement of 2.0 liters or less.
The increased investment in the "two new" policies in 2025 and their implementation throughout the year are expected to bring a greater increment to auto consumption this year. Meanwhile, the policy of exempting new energy vehicles from purchase tax in 2026 will be adjusted to a 50% reduction. Wang Meng, an expert from the China Automobile Dealers Association, predicts that consumers' wait-and-see attitude towards using subsidies, coupled with the changes in the purchase tax for new energy vehicles, will witness another wave of auto consumption boom by the end of this year.
This year, the trade-in policies in various regions have also been innovated. Shanghai's trade-in policy, which was just issued on April 12th, has expanded the scope of subsidies for car replacement and renewal to include old vehicles with non-local license plates. This year, Xining's new policy has added a subsidy policy for the purchase of fuel vehicles. It adopts a joint subsidy model between the Xining Municipal Bureau of Commerce and the Qinghai Xining Branch of China National Petroleum Corporation to promote the development of the auto consumption and the retail market of refined oil products.
With the gradual manifestation of the policy effect, the sales of automobiles have shown a steady growth trend. From January to February this year, the national volume of scrapped car recycling increased by 50.1% year-on-year. The number of cars traded in for new ones exceeded 1.07 million, driving new car sales to 116.5 billion yuan.
Cui Dongshu, secretary-general of the China Passenger Car Association Branch, wrote that before the release of the new round of the "two new" policies, market enthusiasm was relatively low. In January, consumers were mostly in a state of observation and waiting. After the policies were released at the end of January 2025, market enthusiasm grew rapidly in February and March. The retail sales of narrow passenger vehicles in February and March ultimately exceeded the previous expectations.
In fact, apart from trade-in programs, opinions and policies promoting car consumption also cover other aspects. On March 16th, the General Office of the Central Committee of the Communist Party of China and The General Office of the State Council issued the "Special Action Plan for Boosting Consumption". The plan mentioned three times the promotion of car-related consumption and policy guidance. Besides trade-in, it also includes the circulation of second-hand cars and the reduction of purchase restrictions.
Last year, the number of automobiles in China had reached 353 million. These vehicles will generate huge service demands during their usage stage, driving the growth of new business forms in the aftermarket.
The plan proposes to extend the automotive consumption chain, carry out pilot projects for automotive circulation and consumption reform, and expand automotive aftermarket consumption such as car modification, leasing, racing and RV camping. Cultivate and expand the business entities of used cars, and continue to implement facilitation measures such as "reverse invoice-issuing" for used car sales and cross-regional transaction registration. Strengthen information sharing in the automotive field, support the development of third-party used car information inquiry platforms, and promote safe and convenient transactions of used cars.
Wang Meng believes that used cars are a crucial link in the entire life cycle of automobiles, connecting the upper and lower parts. Regulating and smoothing the transactions of used cars can not only revitalize the existing car stock but also boost the consumption of new cars. Data from the China Automobile Dealers Association shows that in 2024, the national second-hand car transaction volume reached 19.6142 million units, increasing by 6.52% year-on-year, with the cumulative transaction value exceeding 1.28 trillion yuan.
In addition, for the "long-unsuccessful" carless families, the plan clearly states that the car purchase needs of these families should be guaranteed on a phased basis, promoting the transformation of car and other consumption from purchase management to usage management. As policies are gradually relaxed, the complete abolition of car purchase restrictions will drive a huge amount of car consumption.
At present, various regions are optimizing measures to restrict car purchases and driving, promoting refined and differentiated management of car purchase quotas, and exploring the gradual relaxation or cancellation of purchase restrictions through a combination of economic and technological means.
Data released by the China Association of Automobile Manufacturers shows that in the first quarter of 2025, China's auto production was 7.561 million units, up 14.5% year-on-year, and auto sales were 7.47 million units, up 11.2% year-on-year. With the increase in the production and sales volume of automobiles in our country and the coordinated development of enterprises in the upstream and downstream of the industrial chain, the automotive consumption market will embrace new development opportunities.
Looking ahead to the second quarter, the China Association of Automobile Manufacturers believes that the combined effect of relevant policies will continue to be released. The Shanghai International Auto Show will start a period of intensive new product launches, and promotional activities in many places will be in full swing. This will help further unleash consumption potential and maintain the market growth trend.
