Chisu Jinsheng – Subsidy applications exceed 1.27 million, car trade-in accelerates the release of hundreds of billions of consumption – look at the base of China’s high-quality economic development f

As the automotive market heats up during the peak consumer season of September and October, recent data from the Ministry of Commerce reveals some promising trends. In the first three weeks of September, retail sales of passenger cars reached 1.243 million units, marking a 10% increase compared to the same period last year, and also a 10% rise from the previous month.

Notably, sales of new energy vehicles surged to 664,000 units, showing a remarkable 47% year-on-year growth and a 7% uptick versus the previous month. The push for replacing old consumer goods with new ones has been significantly strong throughout this year, with the automotive trade-in program playing a crucial role. The financial incentives have sparked considerable interest among consumers, leading many car manufacturers to break their sales records.

By October 7, over 1.27 million applications for vehicle trade-in subsidies had been submitted through the Ministry of Commerce’s platform, generating more than 160 billion yuan in new car sales. Notably, new energy vehicles accounted for more than 60% of these subsidy applications. The data also highlighted a 42.4% increase in the recycling of scrapped vehicles from January to August compared to last year, with substantial increases in the months following the trade-in policy’s implementation—growing by 55.6% in May, 72.9% in June, 93.7% in July, and 73.8% in August.

In April, the Ministry of Commerce, alongside 14 other departments, launched a coordinated action plan to boost the trade-in of consumer goods. Subsequently, new regulations outlining the trade-in subsidies for cars were released, which saw increased subsidy standards in August for individual consumers trading in their vehicles—now offering 20,000 yuan for new energy vehicles and 15,000 yuan for traditional fuel vehicles.

The automotive industry is a key engine for China’s high-quality economic development, with its output contributing about 10% to the national GDP and its consumption accounting for around 10% of total retail sales of consumer goods. The trade-in program is revitalizing auto consumption and instilling confidence across the consumer market.

To further stimulate this sector, the People’s Bank of China and the Financial Regulatory Authority have adjusted the maximum loan-to-value ratio for auto loans, enabling financial institutions to offer “zero down payment” options. Additionally, the State Taxation Administration has clarified that resource recovery companies can issue reverse invoices to individuals selling scrapped goods, alleviating the tax burden on these enterprises.

From January to September, total vehicle sales hit 21.571 million units, representing a 2.4% year-on-year increase, with new energy vehicle sales reaching 8.32 million units—a significant 32.5% growth, now accounting for 38.6% of total vehicle sales.

Efforts have also been made to streamline the process for consumers to collect their subsidies. The Ministry of Commerce has developed an information platform and launched an app for the vehicle trade-in program, allowing users to easily submit applications and track their status through a unified system.

Moreover, regional measures have been set in place to enhance the effectiveness of the trade-in policy. In Hubei, consumers who transfer their old vehicles and purchase new ones can receive tiered subsidies for new energy and fuel vehicles, ranging from 7,000 to 16,000 yuan depending on the vehicle type. Similarly, in Guizhou, those who scrap or transfer old vehicles in exchange for new energy cars can receive subsidies based on a percentage of the transaction amount.

At a Politburo meeting held on September 26, it was emphasized that combining consumer promotion with enhancing livelihoods would help increase income for middle and low-income groups and improve consumption patterns.

With consumption being a vital driver of China’s economic growth, the overall market remains stable. As the trade-in program gains momentum, there is significant potential for the automotive and home appliance sectors to better meet consumer demands while fostering sustained consumption growth, developing new productive forces, and accelerating green transformations across related industries.