Original title: "Tap the potential" automobile consumption by trade in
As the State Council issued the Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Trade in, the Ministry of Commerce, the Ministry of Finance and other departments jointly issued the Detailed Rules for the Implementation of Car Trade in Subsidy, actively following the implementation plan of entering and exiting Taiwan, and supporting the trade in of cars, especially new energy vehicles. While boosting automobile consumption, the dividend is transmitted to all aspects of automobile export, second-hand cars and other circulation, injecting new momentum into the automobile industry.
"Main force" of new energy vehicle replacement
Recently, seven departments including the Ministry of Commerce and the Ministry of Finance jointly issued the Detailed Rules for the Implementation of Car Trade in Subsidy (hereinafter referred to as the Detailed Rules), which clarifies the car trade in subsidy policy. Industry insiders believe that the release of the Detailed Rules will effectively promote the elimination and updating of old vehicles, accelerate the popularization of new energy vehicles, and further release the potential of domestic automobile consumption.
The Detailed Rules specify the scope and standard of subsidy: from the date of printing to December 31 of this year, individual consumers who scrapped passenger cars with national emission standards of III and below, or new energy passenger cars registered before April 30, 2018, and purchased passenger cars that meet the energy-saving requirements, can enjoy a one-time quota subsidy. Among them, 10000 yuan will be subsidized for scrapping the above two types of old vehicles and purchasing new energy passenger vehicles; For the scrapped passenger cars with the emission standard of the third country and below and the purchase of passenger cars with the displacement of 2.0L and below, RMB 7000 will be subsidized.
"The Detailed Rules are intended to promote the elimination and updating of old vehicles, accelerate the popularization of new energy vehicles, and promote energy conservation, emission reduction and the upgrading of the automobile industry." Hong Yong, an expert of the 50 person Forum on China's Data Reality Integration, said.
Hong Yong pointed out that by distinguishing different types of old vehicles and giving different subsidies, not only environmental friendly consumption choices are encouraged, but also the diversity of actual market demand is taken into account. This is expected to effectively activate the automobile market, especially the new energy vehicle market, significantly increase the sales of new energy vehicles, and accelerate the development of the new energy vehicle industry. At the same time, driving the activity of relevant industrial chains has a positive impact on environmental protection and economic development.
"With the rise of new energy vehicles, many consumers are willing to replace traditional fuel vehicles with more environmentally friendly new energy vehicles, and the introduction of the policy has undoubtedly contributed to this change." Zhu Keli, executive director of the China Information Association and founding president of the National Research Institute of New Economics, said.
Data shows that by the end of 2023, the number of passenger cars in China has reached 280 million, of which about 110 million are in the peak period of core exchange and purchase. Analysts believe that under the background of such a huge stock, the implementation of the Detailed Rules will effectively stimulate the demand for replacement of passenger cars and the consumption of new cars.
Kaiyuan Securities believes that there is a broad demand for scrapping and replacement of automobiles in China. It is estimated that the recovery of scrapped automobiles in 2027 will be about twice as large as that in 2023.
Wang Xiaoyu, senior vice president of melon seed used cars, said that with the enrichment of new energy vehicle application scenarios and the reduction of comprehensive use costs, taking advantage of a new round of large-scale equipment renewal and consumer goods trade in, its market share is expected to accelerate in the next few years, and the target of 60% penetration rate of new energy vehicle market by 2030 is expected to be completed ahead of schedule.
Implementation plan for multi site follow in and out
With regard to the central and local funding support ratio, the Detailed Rules further clarified that the subsidy fund for car trade in should be shared by the central and local finance at a ratio of 6:4, and the specific sharing ratio should be determined by region. Among them, the eastern provinces are shared at a ratio of 5:5, the central provinces are shared at a ratio of 6:4, and the western provinces are shared at a ratio of 7:3. The provincial financial department shall take the lead in implementing the local burden.
Zhu Keli believes that the central finance and local governments will provide financial support and encourage financial institutions to provide loan support under the premise of controllable risks, which will greatly reduce the economic pressure of consumers to trade in the old for the new and further promote consumer demand.
It is reported that many provinces and cities have introduced the policy of replacing old cars with new ones. The first round of Guangdong Provincial Finance arranged 370 million yuan to support the 2024 Guangdong "old for new" consumption voucher activity. During the activity, consumers will transfer their own vehicles in Guangdong, and purchase new energy vehicles and fuel vehicles that meet the national six emission standards in Guangdong, and pay subsidies for "replacement for new" consumption vouchers according to the price of the newly purchased vehicles; Shanghai has announced a new round of subsidy policy for fuel vehicles and a new energy vehicle replacement policy. Fuel vehicles can apply for a one-time subsidy of 2800 yuan and new energy vehicles can apply for a one-time subsidy of 10000 yuan; Ningxia launched a combination of scrapping (recycling) subsidies, used car discounts, new car subsidies and other policies.
The Implementation Plan of Tianjin for Promoting Large scale Equipment Renewal and Consumer Goods Swap for New was recently issued, which clarifies the measures of organizing automobile production and sales enterprises to carry out trade in promotions. Subsequently, at the Tianjin International Automobile Fair during the "May Day" holiday, the number of visitors exceeded 200000, and more than 11000 sets were sold and ordered on site.
Chongqing United Auto Information Platform understands that Chedi grants subsidies for new car consumption and assists in second-hand car sales. Previously, a survey of car buyers launched by Knowledger and the China Association of Automobile Manufacturers showed that more than 60% of the respondents believed that it was "very necessary" to introduce a car trade in policy, and nearly 30% of the car owners had plans to replace old cars and buy new ones within a year. The relevant person in charge of Know Auto believes that the car trade in policy meets the expectations of consumers, enterprises and industries, and will provide a strong driving force for the growth of the car market.
According to the data released by the China Association of Automobile Manufacturers, in the first quarter of 2024, China's automobile production and sales reached 6.606 million and 6.72 million, up 6.4% and 10.6% year on year, respectively, to achieve a good start to the new year. Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, believes that a large number of new cars have been launched, auto shows and other offline activities have been carried out, as well as the old for new promotion policy and other factors, making 6.72 million cars the best quarterly market data since 2019. "The trade in policy may be the key factor determining whether the car market can grow this year."
The old for new bonus continues to extend
With the gradual implementation of the old for new policy, car companies have also taken action. Geely, Chery, Dongfeng and many other brands have launched the old for new discount activities. The new energy vehicle brand Weilai announced that it would introduce a subsidy of up to 1 billion yuan for oil vehicle replacement. Oil vehicle users will receive subsidies such as optional equipment fund when they trade in new cars of Weilai.
Stimulated by the new policy, the domestic car market is still hot, and new energy vehicles are "rushing" to the forefront. According to the analysis of the relevant person in charge of Know Auto, from the current preferential policy of trade in, the subsidy for new energy vehicles is mostly higher than that for fuel vehicles, so new energy vehicles will benefit more.
In addition to purchase subsidies, there are also more and more supporting policies to support the use of new energy vehicles. The customer service center of the State Grid is promoting the peak and valley time sharing power consumption of residential charging piles to help users "save money".
For new users who are about to install personal charging piles, the customer service center of the State Grid will combine the new installation of charging piles and the application for opening peak valley power on the online State Grid App. This function has been launched in 11 regions, including Shandong. More than 630000 users have installed new charging piles and opened peak valley power simultaneously through this function, saving more than 30% of the monthly electricity charge. Users who have installed charging piles can also apply for opening, and this function has been launched in 6 regions including Hubei. Qu Yi, the head of new energy products at State Grid Online, said: "New energy owners usually work in the daytime and charge their cars at night, while at night, the price of electricity is low, which can reduce the use cost of new energy vehicles."
The old for new bonus is still extending to the second-hand car market. In the Action Plan for Promoting the Trade in of Consumer Goods issued by 14 departments including the Ministry of Commerce, it was proposed to promote the safe and convenient transaction of second-hand cars, give play to the advantages of the second-hand car trading platform directly linking buyers and sellers, and promote the reduction of links, cost and efficiency of second-hand car transactions. This benefit has been reflected in the sales data. According to the China Automobile Circulation Association, 1.68 million second-hand cars were traded in April, an increase of 14.7% over the same period last year.
Wang Xiaoyu and other insiders believe that the trade in policy is conducive to promoting the transparency and standardization of the circulation of used cars, improving the efficiency of car renewal, and providing consumers with more and better used cars.
"With the increase of policy support, renewal consumption will release the demand for replacement vehicles and accelerate the transformation of China's fuel vehicle market to the new energy vehicle market," said Wang Xiaoyu. (Reporter Mao Zhenhua, Wang Jinghuai, Song Rui, Gao Ting, Ding Yawen)
