China Boosts Subsidies for Consumers Who Trade In Old Cars for New Ones

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A vehicle scrapyard in Tongling, Anhui province.

China has increased subsidies to consumers who trade in their old traditional fuel cars for new ones as part of a 300-billion-yuan ($41 billion) stimulus program designed to boost consumption.

The National Development and Reform Commission and the Ministry of Finance on Thursday issued guidelines to encourage the replacement of large-scale industrial equipment and older consumer goods with new, more efficient versions. The 300-billion-yuan program will be financed through the sale of ultra-long-term special government bonds.

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China is implementing a 300-billion-yuan ($41 billion) stimulus plan to encourage the replacement of old industrial and consumer goods, focusing on automobiles.
The program offers up to 20,000 yuan for new NEVs and 15,000 yuan for low-emission fuel cars, but consumer uptake has been limited.
Despite increased subsidies, dealer reports show insufficient market impact, with price reductions by NEV brands losing effectiveness over time.

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Who’s Who

Automobile Data of China Co. Ltd.: Automobile Data of China Co. Ltd. reported on June 20 that consumer enthusiasm for trade-in incentives remains tepid, with insufficient purchasing power affecting automobile consumption. Their data highlights the limited market impact of the car trade-in initiative, despite increased subsidies.

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What Happened When

By the first half of 2024：: Domestic auto sales reached 11.3 million units, a 1.4% increase year-on-year.

April 2024：: Initial guidelines were issued, setting subsidies at 10,000 yuan for new NEVs and 7,000 yuan for lower-emission fuel cars.

June 18, 2024：: Promotional activities were held to boost sales.

June 20, 2024：: A report by Automobile Data of China Co. Ltd. showed consumer enthusiasm remains tepid with insufficient purchasing power affecting automobile consumption.